Michigan residents are reminded to file their tax returns promptly to take advantage of the state’s tax relief measures. Two key state tax changes could offer eligible taxpayers additional financial benefits.
Recently, Michigan’s governor emphasized the importance of understanding the available tax credits for retirees and working families. Specifically, the Michigan Earned Income Tax Credit (EITC) for Working Families has been expanded, now allowing eligible individuals with income below a certain threshold to claim a larger credit. The Michigan EITC was increased from 6% to 30% of the federal EITC, with last year’s average federal EITC being $2,587, and the previous Michigan EITC averaging $154.
Additionally, many seniors will benefit from the Retirement Tax Repeal this tax season. This repeal, part of the Lowering MI Costs Plan, is expected to provide around $1,000 to approximately 500,000 households.
The Lowering MI Costs Plan introduces more options for taxing retirement benefits for the 2023 tax year. Over the next four years, the law will gradually restore the pre-2012 retirement and pension subtraction for most taxpayers, with full implementation by 2026. Retirees should file their 2023 tax returns on time to benefit from these expanded options and avoid the need to file an amended return later.
Filing electronically and opting for direct deposit for refunds is encouraged, as this method is convenient, safe, and secure. Last year, about 4.7 million Michigan taxpayers, representing approximately 90% of state income tax filers, submitted their returns electronically.