State Rep. Mark Tisdel, R-Rochester Hills, listens during a House Tax Policy Committee hearing on Thursday, Feb. 24, at the state Capitol. Tisdel, who serves as the committee’s majority vice chair, helped advance a plan to reduce the income tax for working families and help seniors increase their tax savings.
State Rep. Mark Tisdel, majority vice chair of the House Committee on Tax Policy, today approved a plan to reduce taxes for individuals and small businesses and expand tax savings for seniors.
House Bill 5838, which would provide $1.7 billion in annual tax relief, received approval from the committee today.
“Grocery store shelves are marked by higher price tags, demanding more from working families and retired workers now trying to enjoy their golden years,” said Tisdel, R-Rochester Hills. “Between the pandemic, inflation, supply chain delays and staffing challenges, small businesses have also endured a rough few years. A measured tax cut would help reduce the state’s burden on the people of Greater Rochester. With more money in their pockets, families and local businesses will be better positioned to weather the economic storm we all face.”
House Bill 5838 would lower Michigan’s individual income tax rate from 4.25% to 3.9%, reducing the burden on families, as well as small businesses that pay taxes at the individual level.
Tisdel previously led a successful tax reform effort for the small businesses that pay the individual income tax, known as flow-through entities. Last year, he spearheaded passage of a new law to help these businesses save on their federal taxes by opting into an alternate tax structure. The proposed rate reduction in HB 5838 would apply regardless of whether the business pays the income tax or the alternate tax.
In addition to paying a lower rate, seniors 62 years and older would be able to exempt $20,000 of all income from the state income tax, or $40,000 for couples filing jointly. Eligibility for this exemption currently begins at age 67. The plan would further enable seniors to deduct retirement income — such as pensions, 401(k) plans and individual retirement accounts — not already included in the first exemption. This additional deduction would also allow up to $20,000 for individual filers and $40,000 for joint filers.
HB 5838 now advances to the entire House of Representatives for consideration.
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