Bill Text: MI HB5955 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Individual income tax: forms; voluntary contributions to local teacher supply reimbursement fund; provide for, and allow deduction. Amends secs. 30, 435, 623, 693 & 695 of 1967 PA 281 (MCL 206.30 et seq.).
Spectrum: Partisan Bill (Democrat 26-0)
Status: (Introduced - Dead) 2020-07-23 - Bill Electronically Reproduced 07/22/2020 [HB5955 Detail]
Download: Michigan-2019-HB5955-Introduced.html
HOUSE BILL NO. 5955
July 22, 2020, Introduced by Reps. Witwer,
Camilleri, Brixie, Sowerby, Sabo, Tyrone Carter, Peterson, Hood, Pohutsky,
Hope, Kennedy, Manoogian, Chirkun, Anthony, Stone, Brenda Carter, Hoadley,
Lasinski, Greig, Hertel, Bolden, Pagan, Guerra, Yancey, Gay-Dagnogo and
Koleszar and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 30, 435, 623, 693, and 695 (MCL 206.30, 206.435, 206.623, 206.693, and 206.695), section 30 as amended by 2018 PA 589, section 435 as amended by 2018 PA 258, section 623 as amended by 2014 PA 13, and sections 693 and 695 as added by 2011 PA 38.
the people of the state of michigan enact:
Sec. 30. (1) "Taxable income" means, for a
person other than a corporation, estate, or trust, adjusted gross income as
defined in the internal revenue code subject to the following adjustments under
this section:
(a) Add gross interest
income and dividends derived from obligations or securities of states other
than Michigan, in the same amount that has been excluded from adjusted gross
income less related expenses not deducted in computing adjusted gross income
because of section 265(a)(1) of the internal revenue code.
(b) Add taxes on or
measured by income to the extent the taxes have been deducted in arriving at
adjusted gross income.
(c) Add losses on the
sale or exchange of obligations of the United States government, the income of
which this state is prohibited from subjecting to a net income tax, to the
extent that the loss has been deducted in arriving at adjusted gross income.
(d) Deduct, to the extent
included in adjusted gross income, income derived from obligations, or the sale
or exchange of obligations, of the United States government that this state is
prohibited by law from subjecting to a net income tax, reduced by any interest
on indebtedness incurred in carrying the obligations and by any expenses incurred
in the production of that income to the extent that the expenses, including
amortizable bond premiums, were deducted in arriving at adjusted gross income.
(e) Deduct, to the extent
included in adjusted gross income, the following:
(i) Compensation, including retirement or pension benefits,
received for services in the Armed Forces of the United States.
(ii) Retirement or
pension benefits under the railroad retirement act of 1974, 45 USC 231 to 231v.
(iii) Beginning January
1, 2012, retirement or pension benefits received for services in the Michigan
National Guard.
(f) Deduct the following to the extent included in adjusted
gross income subject to the limitations and restrictions set forth in
subsection (9):
(i) Retirement or
pension benefits received from a federal public retirement system or from a
public retirement system of or created by this state or a political subdivision
of this state.
(ii) Retirement or
pension benefits received from a public retirement system of or created by
another state or any of its political subdivisions if the income tax laws of
the other state permit a similar deduction or exemption or a reciprocal
deduction or exemption of a retirement or pension benefit received from a
public retirement system of or created by this state or any of the political
subdivisions of this state.
(iii) Social Security
benefits as defined in section 86 of the internal revenue code.
(iv) Beginning on and
after January 1, 2007, retirement or pension benefits not deductible under
subparagraph (i) or subdivision
(e) from any other retirement or pension system or benefits from a retirement
annuity policy in which payments are made for life to a senior citizen, to a
maximum of $42,240.00 for a single return and $84,480.00 for a joint return.
The maximum amounts allowed under this subparagraph shall be reduced by the
amount of the deduction for retirement or pension benefits claimed under
subparagraph (i) or subdivision
(e) and by the amount of a deduction claimed under subdivision (p). For the
2008 tax year and each tax year after 2008, the maximum amounts allowed under
this subparagraph shall be adjusted by the percentage increase in the United
States Consumer Price Index for the immediately preceding calendar year. The
department shall annualize the amounts provided in this subparagraph as
necessary. As used in this
subparagraph, "senior citizen" means that term as defined in section
514.
(v) The amount
determined to be the section 22 amount eligible for the elderly and the
permanently and totally disabled credit provided in section 22 of the internal
revenue code.
(g) Adjustments resulting from the application of section
271.
(h) Adjustments with respect to estate and trust income as
provided in section 36.
(i) Adjustments resulting from the allocation and
apportionment provisions of chapter 3.
(j) Deduct the following payments made by the taxpayer in the
tax year:
(i) For the 2010 tax
year and each tax year after 2010, the amount of a charitable contribution made
to the advance tuition payment fund created under section 9 of the Michigan
education trust act, 1986 PA 316, MCL 390.1429.
(ii) The amount of
payment made under an advance tuition payment contract as provided in the
Michigan education trust act, 1986 PA 316, MCL 390.1421 to 390.1442.
(iii) The amount of
payment made under a contract with a private sector investment manager that
meets all of the following criteria:
(A) The contract is certified and approved by the board of
directors of the Michigan education trust to provide equivalent benefits and
rights to purchasers and beneficiaries as an advance tuition payment contract
as described in subparagraph (ii).
(B) The contract applies only for a state institution of
higher education as defined in the Michigan education trust act, 1986 PA 316, MCL
390.1421 to 390.1442, or a community or junior college in Michigan.
(C) The contract provides for enrollment by the contract's
qualified beneficiary in not less than 4 years after the date on which the
contract is entered into.
(D) The contract is entered into after either of the
following:
(I) The purchaser has had his or her offer to enter into an
advance tuition payment contract rejected by the board of directors of the
Michigan education trust, if the board determines that the trust cannot accept
an unlimited number of enrollees upon an actuarially sound basis.
(II) The board of directors of the Michigan education trust
determines that the trust can accept an unlimited number of enrollees upon an
actuarially sound basis.
(k) If an advance tuition payment contract under the Michigan
education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, or another contract
for which the payment was deductible under subdivision (j) is terminated and
the qualified beneficiary under that contract does not attend a university,
college, junior or community college, or other institution of higher education,
add the amount of a refund received by the taxpayer as a result of that
termination or the amount of the deduction taken under subdivision (j) for
payment made under that contract, whichever is less.
(l) Deduct from the
taxable income of a purchaser the amount included as income to the purchaser
under the internal revenue code after the advance tuition payment contract
entered into under the Michigan education trust act, 1986 PA 316, MCL 390.1421
to 390.1442, is terminated because the qualified beneficiary attends an
institution of postsecondary education other than either a state institution of
higher education or an institution of postsecondary education located outside
this state with which a state institution of higher education has reciprocity.
(m) Add, to the extent deducted in determining adjusted gross
income, the net operating loss deduction under section 172 of the internal
revenue code.
(n) Deduct a net operating loss deduction for the taxable
year as determined under section 172 of the internal revenue code subject to
the modifications under section 172(b)(2) of the internal revenue code and
subject to the allocation and apportionment provisions of chapter 3 of this
part for the taxable year in which the loss was incurred.
(o) Deduct, to the extent included in adjusted gross income,
benefits from a discriminatory self-insurance medical expense reimbursement
plan.
(p) Beginning on and after January 1, 2007, subject to any
limitation provided in this subdivision, a taxpayer who is a senior citizen may
deduct to the extent included in adjusted gross income, interest, dividends,
and capital gains received in the tax year not to exceed $9,420.00 for a single
return and $18,840.00 for a joint return. The maximum amounts allowed under
this subdivision shall be reduced by the amount of a deduction claimed for
retirement or pension benefits under subdivision (e) or a deduction claimed
under subdivision (f)(i), (ii), (iv), or (v). For the 2008 tax year and each tax year after 2008, the
maximum amounts allowed under this subdivision shall be adjusted by the
percentage increase in the United States Consumer Price Index for the
immediately preceding calendar year. The department shall annualize the amounts
provided in this subdivision as necessary. Beginning January 1, 2012, the
deduction under this subdivision is not available to a senior citizen born
after 1945. As used in this
subdivision, "senior citizen" means that term as defined in section
514.
(q) Deduct, to the extent included in adjusted gross income,
all of the following:
(i) The amount of a
refund received in the tax year based on taxes paid under this part.
(ii) The amount of a
refund received in the tax year based on taxes paid under the city income tax
act, 1964 PA 284, MCL 141.501 to 141.787.
(iii) The amount of a
credit received in the tax year based on a claim filed under sections 520 and
522 to the extent that the taxes used to calculate the credit were not used to
reduce adjusted gross income for a prior year.
(r) Add the amount paid by the state on behalf of the
taxpayer in the tax year to repay the outstanding principal on a loan taken on
which the taxpayer defaulted that was to fund an advance tuition payment
contract entered into under the Michigan education trust act, 1986 PA 316, MCL
390.1421 to 390.1442, if the cost of the advance tuition payment contract was
deducted under subdivision (j) and was financed with a Michigan education trust
secured loan.
(s) Deduct, to the extent included in adjusted gross income,
any amount, and any interest earned on that amount, received in the tax year by
a taxpayer who is a Holocaust victim as a result of a settlement of claims
against any entity or individual for any recovered asset pursuant to the German
act regulating unresolved property claims, also known as Gesetz zur Regelung
offener Vermogensfragen, as a result of the settlement of the action entitled In re: Holocaust victim assets litigation,
CV-96-4849, CV-96-5161, and CV-97-0461 (E.D. NY), or as a result of any similar
action if the income and interest are not commingled in any way with and are
kept separate from all other funds and assets of the taxpayer. As used in this
subdivision:
(i) "Holocaust
victim" means a person, or the heir or beneficiary of that person, who was
persecuted by Nazi Germany or any Axis regime during any period from 1933 to
1945.
(ii) "Recovered
asset" means any asset of any type and any interest earned on that asset
including, but not limited to, bank deposits, insurance proceeds, or artwork
owned by a Holocaust victim during the period from 1920 to 1945, withheld from
that Holocaust victim from and after 1945, and not recovered, returned, or
otherwise compensated to the Holocaust victim until after 1993.
(t) Deduct all of the following:
(i) To the extent not
deducted in determining adjusted gross income, contributions made by the
taxpayer in the tax year less qualified withdrawals made in the tax year from
education savings accounts, calculated on a per education savings account
basis, pursuant to the Michigan education savings program act, 2000 PA 161, MCL
390.1471 to 390.1486, not to exceed a total deduction of $5,000.00 for a single
return or $10,000.00 for a joint return per tax year. The amount calculated
under this subparagraph for each education savings account shall not be less
than zero.
(ii) To the extent
included in adjusted gross income, interest earned in the tax year on the
contributions to the taxpayer's education savings accounts if the contributions
were deductible under subparagraph (i).
(iii) To the extent
included in adjusted gross income, distributions that are qualified withdrawals
from an education savings account to the designated beneficiary of that
education savings account.
(u) Add, to the extent not included in adjusted gross income,
the amount of money withdrawn by the taxpayer in the tax year from education
savings accounts, not to exceed the total amount deducted under subdivision (t)
in the tax year and all previous tax years, if the withdrawal was not a
qualified withdrawal as provided in the Michigan education savings program act,
2000 PA 161, MCL 390.1471 to 390.1486. This subdivision does not apply to
withdrawals that are less than the sum of all contributions made to an
education savings account in all previous tax years for which no deduction was
claimed under subdivision (t), less any contributions for which no deduction
was claimed under subdivision (t) that were withdrawn in all previous tax
years.
(v) A taxpayer who is a resident tribal member may deduct, to
the extent included in adjusted gross income, all nonbusiness income earned or
received in the tax year and during the period in which an agreement entered
into between the taxpayer's tribe and this state pursuant to section 30c of
1941 PA 122, MCL 205.30c, is in full force and effect. As used in this
subdivision:
(i) "Business
income" means business income as defined in section 4 and apportioned
under chapter 3.
(ii) "Nonbusiness
income" means nonbusiness income as defined in section 14 and, to the
extent not included in business income, all of the following:
(A) All income derived from wages whether the wages are
earned within the agreement area or outside of the agreement area.
(B) All interest and passive dividends.
(C) All rents and royalties derived from real property
located within the agreement area.
(D) All rents and royalties derived from tangible personal
property, to the extent the personal property is utilized within the agreement
area.
(E) Capital gains from the sale or exchange of real property
located within the agreement area.
(F) Capital gains from the sale or exchange of tangible
personal property located within the agreement area at the time of sale.
(G) Capital gains from the sale or exchange of intangible
personal property.
(H) All pension income and benefits including, but not
limited to, distributions from a 401(k) plan, individual retirement accounts
under section 408 of the internal revenue code, or a defined contribution plan,
or payments from a defined benefit plan.
(I) All per capita payments by the tribe to resident tribal
members, without regard to the source of payment.
(J) All gaming winnings.
(iii) "Resident
tribal member" means an individual who meets all of the following
criteria:
(A) Is an enrolled member of a federally recognized tribe.
(B) The individual's tribe has an agreement with this state
pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in full force and
effect.
(C) The individual's principal place of residence is located
within the agreement area as designated in the agreement under sub-subparagraph
(B).
(w) For tax years beginning after December 31, 2011,
eliminate all of the following:
(i) Income from
producing oil and gas to the extent included in adjusted gross income.
(ii) Expenses of
producing oil and gas to the extent deducted in arriving at adjusted gross
income.
(x) For tax years that begin after December 31, 2015, deduct
all of the following:
(i) To the extent not
deducted in determining adjusted gross income, contributions made by the
taxpayer in the tax year less qualified withdrawals made in the tax year from
an ABLE savings account, pursuant to the Michigan ABLE achieving a better life experience (ABLE) program
act, 2015 PA 160, MCL 206.981 to 206.997, not to exceed a total deduction of
$5,000.00 for a single return or $10,000.00 for a joint return per tax year.
The amount calculated under this subparagraph for an ABLE savings account shall
not be less than zero.
(ii) To the extent included
in adjusted gross income, interest earned in the tax year on the contributions
to the taxpayer's ABLE savings account if the contributions were deductible
under subparagraph (i).
(iii) To the extent
included in adjusted gross income, distributions that are qualified withdrawals
from an ABLE savings account to the designated beneficiary of that ABLE savings
account.
(y) Add, For tax years that begin after
December 31, 2015, add, to the extent not included in adjusted
gross income, the amount of money withdrawn by the taxpayer in the tax year
from an ABLE savings account, not to exceed the total amount deducted under
subdivision (x) in the tax year and all previous tax years, if the withdrawal
was not a qualified withdrawal as provided in the Michigan ABLE achieving a better life experience
(ABLE) program act, 2015 PA 160, MCL 206.981 to 206.997. This
subdivision does not apply to withdrawals that are less than the sum of all
contributions made to an ABLE savings account in all previous tax years for which
no deduction was claimed under subdivision (x), less any contributions for
which no deduction was claimed under subdivision (x) that were withdrawn in all
previous tax years.
(z) For tax years that begin after December 31, 2018, deduct,
to the extent included in adjusted gross income, compensation received in the
tax year pursuant to the wrongful imprisonment compensation act, 2016 PA 343,
MCL 691.1751 to 691.1757.
(aa) For tax years beginning on and after January 1, 2021,
deduct, to the extent not deducted in determining adjusted gross income,
contributions made by the taxpayer during the tax year to the local teacher
supply reimbursement fund created in section 7 of the local teacher supply
reimbursement program act.
(2) Except as otherwise provided in subsection (7) and
section 30a, a personal exemption of $3,700.00 multiplied by the number of
personal and dependency exemptions shall be subtracted in the calculation that
determines taxable income. The number of personal and dependency exemptions
allowed shall be determined as follows:
(a) Each taxpayer may claim 1 personal exemption. However, if
a joint return is not made by the taxpayer and his or her spouse, the taxpayer
may claim a personal exemption for the spouse if the spouse, for the calendar
year in which the taxable year of the taxpayer begins, does not have any gross
income and is not the dependent of another taxpayer.
(b) A taxpayer may claim a dependency exemption for each
individual who is a dependent of the taxpayer for the tax year.
(c) For tax years beginning on and after January 1, 2019, a
taxpayer may claim an additional exemption under this subsection in the tax
year for which the taxpayer has a certificate of stillbirth from the department
of health and human services as provided under section 2834 of the public
health code, 1978 PA 368, MCL 333.2834.
(3) Except as otherwise provided in subsection (7), a single
additional exemption determined as follows shall be subtracted in the
calculation that determines taxable income in each of the following
circumstances:
(a) $1,800.00 for each taxpayer and every dependent of the
taxpayer who is a deaf person as defined in section 2 of the deaf persons'
interpreters act, 1982 PA 204, MCL 393.502; a paraplegic, a quadriplegic, or a
hemiplegic; a person who is blind as defined in section 504; or a person who is
totally and permanently disabled as defined in section 522. When a dependent of
a taxpayer files an annual return under this part, the taxpayer or dependent of
the taxpayer, but not both, may claim the additional exemption allowed under
this subdivision.
(b) For tax years beginning after 2007, $250.00 for each
taxpayer and every dependent of the taxpayer who is a qualified disabled
veteran. When a dependent of a taxpayer files an annual return under this part,
the taxpayer or dependent of the taxpayer, but not both, may claim the
additional exemption allowed under this subdivision. As used in this
subdivision:
(i) "Qualified
disabled veteran" means a veteran with a service-connected disability.
(ii)
"Service-connected disability" means a disability incurred or
aggravated in the line of duty in the active military, naval, or air service as
described in 38 USC 101(16).
(iii)
"Veteran" means a person who served in the active military, naval,
marine, coast guard, or air service and who was discharged or released from his
or her service with an honorable or general discharge.
(4) An individual with respect to whom a deduction under
subsection (2) is allowable to another taxpayer during the tax year is not
entitled to an exemption for purposes of subsection (2), but may subtract
$1,500.00 in the calculation that determines taxable income for a tax year.
(5) A nonresident or a part-year resident is allowed that
proportion of an exemption or deduction allowed under subsection (2), (3), or
(4) that the taxpayer's portion of adjusted gross income from Michigan sources
bears to the taxpayer's total adjusted gross income.
(6) In calculating taxable income, a taxpayer shall not
subtract from adjusted gross income the amount of prizes won by the taxpayer
under the McCauley-Traxler-Law-Bowman-McNeely lottery act, 1972 PA 239, MCL
432.1 to 432.47.
(7) For each tax year beginning on and after January 1, 2013,
the personal exemption allowed under subsection (2) shall be adjusted by
multiplying the exemption for the tax year beginning in 2012 by a fraction, the
numerator of which is the United States Consumer Price Index for the state
fiscal year ending in the tax year prior to the tax year for which the
adjustment is being made and the denominator of which is the United States
Consumer Price Index for the 2010-2011 state fiscal year. For the 2022 tax year
and each tax year after 2022, the adjusted amount determined under this
subsection shall be increased by an additional $600.00. The resultant product
shall be rounded to the nearest $100.00 increment. For each tax year, the
exemptions allowed under subsection (3) shall be adjusted by multiplying the
exemption amount under subsection (3) for the tax year by a fraction, the
numerator of which is the United States Consumer Price Index for the state
fiscal year ending the tax year prior to the tax year for which the adjustment
is being made and the denominator of which is the United States Consumer Price
Index for the 1998-1999 state fiscal year. The resultant product shall be
rounded to the nearest $100.00 increment.
(8) As used in this section, "retirement or pension
benefits" means distributions from all of the following:
(a) Except as provided in subdivision (d), qualified pension
trusts and annuity plans that qualify under section 401(a) of the internal
revenue code, including all of the following:
(i) Plans for
self-employed persons, commonly known as Keogh or HR10 plans.
(ii) Individual
retirement accounts that qualify under section 408 of the internal revenue code
if the distributions are not made until the participant has reached 59-1/2
years of age, except in the case of death, disability, or distributions
described by section 72(t)(2)(A)(iv) of the internal
revenue code.
(iii) Employee annuities
or tax-sheltered annuities purchased under section 403(b) of the internal
revenue code by organizations exempt under section 501(c)(3) of the internal
revenue code, or by public school systems.
(iv) Distributions
from a 401(k) plan attributable to employee contributions mandated by the plan
or attributable to employer contributions.
(b) The following retirement and pension plans not qualified
under the internal revenue code:
(i) Plans of the
United States, state governments other than this state, and political
subdivisions, agencies, or instrumentalities of this state.
(ii) Plans maintained
by a church or a convention or association of churches.
(iii) All other
unqualified pension plans that prescribe eligibility for retirement and
predetermine contributions and benefits if the distributions are made from a
pension trust.
(c) Retirement or pension benefits received by a surviving
spouse if those benefits qualified for a deduction prior to the decedent's
death. Benefits received by a surviving child are not deductible.
(d) Retirement and pension benefits do not include:
(i) Amounts received
from a plan that allows the employee to set the amount of compensation to be
deferred and does not prescribe retirement age or years of service. These plans
include, but are not limited to, all of the following:
(A) Deferred compensation plans under section 457 of the
internal revenue code.
(B) Distributions from plans under section 401(k) of the
internal revenue code other than plans described in subdivision (a)(iv).
(C) Distributions from plans under section 403(b) of the
internal revenue code other than plans described in subdivision (a)(iii).
(ii) Premature
distributions paid on separation, withdrawal, or discontinuance of a plan prior
to the earliest date the recipient could have retired under the provisions of
the plan.
(iii) Payments received
as an incentive to retire early unless the distributions are from a pension
trust.
(9) In determining taxable income under this section, the
following limitations and restrictions apply:
(a) For a person born before 1946, this subsection provides
no additional restrictions or limitations under subsection (1)(f).
(b) Except as otherwise provided in subdivision (c), for a
person born in 1946 through 1952, the sum of the deductions under subsection
(1)(f)(i), (ii), and (iv) is limited to $20,000.00 for a single return and $40,000.00
for a joint return. After that person reaches the age of 67, the deductions
under subsection (1)(f)(i), (ii), and (iv) do not apply and
that person is eligible for a deduction of $20,000.00 for a single return and
$40,000.00 for a joint return, which deduction is available against all types
of income and is not restricted to income from retirement or pension benefits.
A person who takes the deduction under subsection (1)(e) is not eligible for
the unrestricted deduction of $20,000.00 for a single return and $40,000.00 for
a joint return under this subdivision.
(c) Beginning January 1, 2013 for a person born in 1946
through 1952 and beginning January 1, 2018 for a person born after 1945 who has
retired as of January 1, 2013, if that person receives retirement or pension
benefits from employment with a governmental agency that was not covered by the
federal social security act, chapter 531, 49 Stat 620, the sum of the
deductions under subsection (1)(f)(i), (ii), and (iv) is limited to
$35,000.00 for a single return and, except as otherwise provided under this
subdivision, $55,000.00 for a joint return. If both spouses filing a joint
return receive retirement or pension benefits from employment with a
governmental agency that was not covered by the federal social security act,
chapter 531, 49 Stat 620, the sum of the deductions under subsection (1)(f)(i), (ii), and (iv) is limited to $70,000.00 for a joint return. After that
person reaches the age of 67, the deductions under subsection (1)(f)(i), (ii), and (iv) do not apply and that person is eligible for a deduction of
$35,000.00 for a single return and $55,000.00 for a joint return, or $70,000.00
for a joint return if applicable, which deduction is available against all
types of income and is not restricted to income from retirement or pension
benefits. A person who takes the deduction under subsection (1)(e) is not
eligible for the unrestricted deduction of $35,000.00 for a single return and
$55,000.00 for a joint return, or $70,000.00 for a joint return if applicable,
under this subdivision.
(d) Except as otherwise provided under subdivision (c) for a
person who was retired as of January 1, 2013, for a person born after 1952 who
has reached the age of 62 through 66 years of age and who receives retirement
or pension benefits from employment with a governmental agency that was not
covered by the federal social security act, chapter 532, 531, 49 Stat 620, the sum of the deductions
under subsection (1)(f)(i), (ii), and (iv) is limited to
$15,000.00 for a single return and, except as otherwise provided under this
subdivision, $15,000.00 for a joint return. If both spouses filing a joint
return receive retirement or pension benefits from employment with a
governmental agency that was not covered by the federal social security act,
chapter 532, 531, 49 Stat 620, the
sum of the deductions under subsection (1)(f)(i), (ii), and (iv) is limited to
$30,000.00 for a joint return.
(e) Except as otherwise provided under subdivision (c) or
(d), for a person born after 1952, the deduction under subsection (1)(f)(i), (ii), or (iv) does not apply. When that person reaches the age of 67,
that person is eligible for a deduction of $20,000.00 for a single return and
$40,000.00 for a joint return, which deduction is available against all types
of income and is not restricted to income from retirement or pension benefits.
If a person takes the deduction of $20,000.00 for a single return and
$40,000.00 for a joint return, that person shall not take the deduction under
subsection (1)(f)(iii) and shall not
take the personal exemption under subsection (2). That person may elect not to
take the deduction of $20,000.00 for a single return and $40,000.00 for a joint
return and elect to take the deduction under subsection (1)(f)(iii) and the personal exemption under subsection (2) if that
election would reduce that person's tax liability. A person who takes the
deduction under subsection (1)(e) is not eligible for the unrestricted
deduction of $20,000.00 for a single return and $40,000.00 for a joint return
under this subdivision.
(f) For a joint return, the limitations and restrictions in
this subsection shall be applied based on the age of the older spouse filing
the joint return.
(10) As used in this section:
(a) "Oil and gas" means oil and gas subject to
severance tax under 1929 PA 48, MCL 205.301 to 205.317.
(b) "Senior citizen" means that term as defined in
section 514.
(c) (b) "United States Consumer Price Index"
means the United States Consumer Price Index for all urban consumers as defined
and reported by the United States Department of Labor, Bureau of Labor
Statistics.
Sec. 435. (1) Except as otherwise provided under this section, an individual may designate in a manner and form as prescribed by the department pursuant to subsection (2) on his or her annual return that contributions of $5.00, $10.00, or more of his or her refund be credited to any of the following:
(a) The children's trust fund created in 1982 PA 249, MCL 21.171 to 21.172.
(b) The military family relief fund created in section 3 of the military family relief fund act, 2004 PA 363, MCL 35.1213.
(c) The animal welfare fund created in section 3 of the animal welfare fund act, 2007 PA 132, MCL 287.993.
(d) The united way fund created in section 3 of the united way fund act, 2008 PA 527, MCL 333.26533.
(e) For the 2016 tax year and each tax year after the 2016 tax year, the Michigan junior achievement fund created in section 5 of the Michigan junior achievement fund act, 2016 PA 181, MCL 206.1015.
(e) (f) For the 2016 tax year and each tax year after the 2016 tax year, the American Red Cross Michigan fund created in section 5 of the American Red Cross Michigan fund act, 2016 PA 183, MCL 206.1035.
(f) (g) For the 2018 tax year and each tax year after the 2018 tax year, the fostering futures scholarship trust fund created in section 3 of the fostering futures scholarship trust fund act, 2008 PA 525, MCL 722.1023.
(g) (h) For the 2018 tax year and each tax year after the 2018 tax year, the Lions of Michigan Foundation fund created in section 5 of the Lions of Michigan Foundation fund act, 2018 PA 255, MCL 206.1045.
(h) (i) For the 2018 tax year and each tax year after the 2018 tax year, the Michigan World War II Legacy Memorial fund created in section 5 of the Michigan World War II Legacy Memorial fund act, 2018 PA 257, MCL 206.1085.
(i) (j) For the 2018 tax year and each tax year after the 2018 tax year, the Kiwanis fund created in section 5 of the Kiwanis fund act, 2018 PA 259, MCL 206.1065.
(j) For the 2021 tax year and each tax year after the 2021 tax year, the local teacher supply reimbursement fund created in section 7 of the local teacher supply reimbursement program act.
(2) Subject to the limitations provided under this subsection, the department shall establish and utilize a separate contributions schedule that incorporates each contribution designation authorized under this section that remains in effect and available for each tax year and shall revise the state individual income tax return form to include a separate line for the total contribution designations made under the separate contributions schedule. The contribution designations authorized under sections 437, 438, and 440 shall be incorporated into the contributions schedule for the 2010 tax year and shall remain on the schedule until the contribution designation expires by law or is otherwise no longer available as determined by the department pursuant to subsection (3). A contribution designation that is enacted after November 1, 2007 shall be incorporated as soon as practical on the contributions schedule, and each new contribution designation shall be listed on the schedule in alphabetical order. The contribution designation for the local teacher supply reimbursement fund under subsection (1)(j) shall include a space for the taxpayer to designate the school district to which his or her contribution is to be distributed. The separate contributions schedule required under this section shall include not more than 10 separate contribution designations in any single tax year.
(3) The department shall cease to include a contribution designation on the contributions schedule if that contribution designation fails to raise $50,000.00 in any tax year for 2 consecutive tax years.
(4) If an individual's refund is not sufficient to make a contribution under this section, the individual may designate a contribution amount and that contribution amount shall be added to the individual's tax liability for the tax year.
(6) Money appropriated pursuant to an appropriations act as required by law in accordance with this section to the department responsible for administering each respective fund shall be in addition to any other allocation or appropriation and is intended to enhance appropriations from the general fund and not to replace or supplant those appropriations.
(7) Notwithstanding any other provision of law, all of the following apply:
(a) Money appropriated from the contributions made pursuant to this section shall be distributed as provided in each respective fund within 1 year and none of the money appropriated pursuant to this section shall be used for the purpose of administering the fund.
(b) If the fund to which the taxpayer designated his or her contributions is to be used for donations to multiple organizations located in this state, the department responsible for administering that fund shall designate 1 local representative or agency of that organization to administer and distribute those funds to other similar organizations in this state as provided in each respective act that created the fund.
(8) When considering whether to grant legislative approval to amend the state individual income tax return to include additional contribution designations on the contributions schedule, the legislature shall consider all of the following:
(a) Whether the organization serves multiple regions throughout this state.
(b) Whether the organization has demonstrated that it is capable of raising more than $50,000.00 in this state during the tax year through means other than the income tax contribution designation.
(c) Whether the organization expends 30% or more of its money to cover administrative and fund-raising costs.
(d) Whether the organization had previously been included on the contributions schedule within the last immediately preceding 3 years and was removed because it failed to raise a sufficient amount of money as prescribed under subsection (3).
(e) Whether the organization receives any other state funds or other type of financial assistance from this state.
(f) Whether the organization is associated with a nonprofit charitable organization.
Sec. 623.
(1) Except as otherwise provided in this part, there is levied and imposed a
corporate income tax on every taxpayer with business activity within this state
or ownership interest or beneficial interest in a flow-through entity that has
business activity in this state unless prohibited by 15 USC 381 to 384. The
corporate income tax is imposed on the corporate income tax base, after
allocation or apportionment to this state, at the rate of 6.0%.
(2) The corporate income tax base means a taxpayer's
business income subject to the following adjustments, before allocation or
apportionment, and the adjustment in
subsection (4) adjustments in
subsections (4) and (5) after allocation or apportionment:
(a) Add interest income and dividends derived from
obligations or securities of states other than this state, in the same amount
that was excluded from federal taxable income, less the related portion of
expenses not deducted in computing federal taxable income because of sections
265 and 291 of the internal revenue code.
(b) Add all taxes on or measured by net income
including the tax imposed under this part to the extent that the taxes were
deducted in arriving at federal taxable income.
(c) Add any carryback or carryover of a net operating
loss to the extent deducted in arriving at federal taxable income.
(d) To the extent included in federal taxable income,
deduct dividends and royalties received from persons other than United States
persons and foreign operating entities, including, but not limited to, amounts
determined under section 78 of the internal revenue code or sections 951 to 964
of the internal revenue code.
(e) Except as otherwise provided under this
subdivision, to the extent deducted in arriving at federal taxable income, add
any royalty, interest, or other expense paid to a person related to the
taxpayer by ownership or control for the use of an intangible asset if the
person is not included in the taxpayer's unitary business group. The addition
of any royalty, interest, or other expense described under this subdivision is
not required to be added if the taxpayer can demonstrate that the transaction
has a nontax business purpose, is conducted with arm's-length pricing and rates
and terms as applied in accordance with sections 482 and 1274(d) of the
internal revenue code, and 1 of the following is true:
(i) The transaction
is a pass through of another transaction between a third party and the related
person with comparable rates and terms.
(ii) An addition would result in double taxation. For purposes
of this subparagraph, double taxation exists if the transaction is subject to
tax in another jurisdiction.
(iii) An addition would be unreasonable as determined by the
state treasurer.
(iv) The related person recipient of the transaction is
organized under the laws of a foreign nation which has in force a comprehensive
income tax treaty with the United States.
(f) To the extent
included in federal taxable income, deduct interest income derived from United
States obligations.
(g) For tax years
beginning after December 31, 2011, eliminate all of the following:
(i) Income from producing oil and gas to the extent included in
federal taxable income.
(ii) Expenses of producing oil and gas to the extent deducted in
arriving at federal taxable income.
(h) For tax years
beginning after December 31, 2012, for a qualified taxpayer, eliminate all of
the following:
(i) Income derived from a mineral to the extent included in
federal taxable income.
(ii) Expenses related to the income deductible under
subparagraph (i) to the extent
deducted in arriving at federal taxable income.
(3) For purposes of
subsection (2), the business income of a unitary business group is the sum of
the business income of each person included in the unitary business group less
any items of income and related deductions arising from transactions including
dividends between persons included in the unitary business group.
(4) Deduct any
available business loss incurred after December 31, 2011. As used in this
subsection, "business loss" means a negative business income taxable
amount after allocation or apportionment. For purposes of this subsection, a
taxpayer that acquires the assets of another corporation in a transaction
described under section 381(a)(1) or (2) of the internal revenue code may
deduct any business loss attributable to that distributor or transferor
corporation. The business loss shall be carried forward to the year immediately
succeeding the loss year as an offset to the allocated or apportioned corporate
income tax base, then successively to the next 9 taxable years following the
loss year or until the loss is used up, whichever occurs first.
(5) Deduct, to the
extent included in federal taxable income, contributions made during the tax
year to the local teacher supply reimbursement fund created in section 7 of the
local teacher supply reimbursement program act.
(6) (5) As used in this section, "oil and gas" means oil
and gas that is subject to severance tax under 1929 PA 48, MCL 205.301 to
205.317.
Sec. 693.
(1) The tax imposed by this part shall be administered by the department of
treasury pursuant to 1941 PA 122, MCL 205.1 to 205.31, and this part. If a
conflict exists between 1941 PA 122, MCL 205.1 to 205.31, and this part, the
provisions of this part apply.
(2) The department may promulgate rules to implement
this part pursuant to the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328.
(3) The department shall prescribe forms for use by
taxpayers and may promulgate rules in conformity with this part for the
maintenance by taxpayers of records, books, and accounts, and for the
computation of the tax, the manner and time of changing or electing accounting
methods and of exercising the various options contained in this part, the
making of returns, and the ascertainment, assessment, and collection of the tax
imposed under this part. Beginning with
the 2021 tax year and each tax year after 2021, the income tax return required
to be filed under this part shall include a space for the taxpayer to
contribute to the local teacher supply reimbursement fund created in section 7
of the local teacher supply reimbursement program act and designate the school
district to which the contribution is to be distributed.
(4) The tax imposed by this part is in addition to all
other taxes for which the taxpayer may be liable.
(5) The department shall prepare and publish
statistics from the records kept to administer the tax imposed by this part
that detail the distribution of tax receipts by type of business, legal form of
organization, sources of tax base, timing of tax receipts, and types of
deductions. The statistics shall not result in the disclosure of information
regarding any specific taxpayer.
Sec. 695.
The revenue collected under this part shall be distributed to the general fund. Each year that a contribution designation under
section 693 is in effect, an amount equal to the cumulative designations made
under section 693 on a return filed under this part shall be appropriated from
the general fund and distributed to the local teacher supply reimbursement fund
created in section 7 of the local teacher supply reimbursement program act and
be used solely for the purposes of that fund.
Enacting section 1. This amendatory act does not take effect unless Senate Bill No.____ or House Bill No.____ (request no. 05869'20) of the 100th Legislature is enacted into law.
