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Senate approves Rep. Tisdel plan for small-business tax savings
RELEASE|June 23, 2021
Contact: Mark Tisdel

The Michigan Senate today approved a plan introduced by state Rep. Mark Tisdel to help protect Michigan jobs by reducing the federal tax burden on small businesses.

“This plan will help level an unfair playing field between large and small businesses,” said Tisdel, of Rochester Hills. “Michigan small businesses will be able to opt into an alternate state tax structure to maximize their federal tax deduction — all without reducing state revenue.”

Tisdel’s House Bill 4288 would allow S corporations, partnerships, and LLCs — known as flow-through entities — to maximize the state and local tax (SALT) deduction on their federal tax returns.

While larger C corporations file their business income taxes as entities, flow-through entities file at the individual owner level. A change to the federal tax code in 2017 capped individual SALT deductions at $10,000. Because businesses filing on the entity level can continue to claim an uncapped deduction, the change places small flow-through entities at a disadvantage.

HB 4288 would compensate for the federal change by allowing flow-through entities to pay a new flow-through entity tax. A business that opted into the new tax would be eligible for a greater SALT deduction at the federal level, without a change to their overall state and local tax burden.

“This plan is a win for Michigan small businesses, which in turn is a win for our entire state,” said Tisdel, majority vice chair of the House Committee on Tax Policy. “Small businesses will be able to use their tax savings to expand and invest right here in Michigan, where they can continue to create good jobs and boost our state’s economy.”

HB 4288 passed the Senate by a bipartisan vote of 29-6, and it now advances to Gov. Gretchen Whitmer for her consideration. The House of Representatives previously approved the bill in an 88-18 vote.

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