By Jon King, Michigan Advance
Beginning February 13, more than 700,000 Michigan families will receive tax rebate checks averaging approximately $550.
Gov. Gretchen Whitmer announced the rebates Thursday morning, which will come ahead of schedule, as part of $1 billion in tax cuts she signed into law earlier this year that also decreased taxes on retirement income.
The Working Families Tax Credit for lower-income workers, also known as the Earned Income Tax Credit (EITC), was quintupled from 6% to 30% of the federal credit beginning with the 2023 tax year. It applied retroactively to 2022, meaning eligible Michiganders can receive both an additional check from their 2022 tax return and also receive the full 30% tax credit on their 2023 tax filing when they file next year.
“This directly benefits half the children in Michigan, and moms and dads can use this extra money at tax time to pay the bills, put food on the table, and buy school supplies,” said Whitmer. “Across the United States, inflation is decreasing and take-home pay is increasing, proving that our work in Michigan and President Biden’s efforts in Washington are moving us in the right direction. We still have more work to do, and today’s announcement will help get you some relief sooner than expected. Let’s keep rolling up our sleeves, lowering costs, and growing our economy.”
The checks coming in February will be the difference between the 6% tax credit Michiganders received on their tax return and the 30% that is owed to them under the new law. Based on data from last year’s returns, Whitmer says Michiganders should expect to receive an additional $550 on average.
“This expansion will deliver an average combined tax refund of $3,150 to 700,000 families, directly impacting nearly one million kids — almost half the kids in Michigan,” stated a release.
According to the IRS, in order to qualify for the EITC, a person must have “worked and earned income under $63,398,” and have investment income below $11,000. They must also be a U.S. citizen and have a valid Social Security number.
Whitmer says the legislation had been intended to provide Michiganders with the tax credit earlier this year, but Republican lawmakers declined to give it immediate effect, delaying it for a full year.
Democratic lawmakers had originally proposed $180 “inflation relief checks” for Michigan tax filers, but were unable to enlist enough Republican support for that to happen because the state would have used about $800 million from its General Fund to issue the checks, and that spending could have averted an automatic income tax cut due to a 2015 law that ties the income tax to the state’s General Fund. Some legal experts have said that the Legislature overstepped its authority with that 2015 legislation.
“As a result, the Whitmer Administration retained the funding to begin distributing when the law fully takes effect on February 13, 2024, meaning Michiganders will get the money that was owed to them,” the release said.
Lt. Gov. Garlin Gilchrist is slated to do an event in Detroit Thursday afternoon highlighting the policy.
Legislative leaders hailed Thursday’s announcement as the fulfillment of a long sought goal to adjust Michigan’s tax structure to better benefit working families.
“Before I was elected, I was a nonprofit caseworker who helped remove barriers that kept people from being successful at work. For many of them, the Earned Income Tax Credit was a major factor in how they were going to cover accumulating bills, afford clothes for a growing child, make a much-needed car repair, or pay a big medical bill about to go to collections,” said state Senate Majority Leader Winnie Brinks, (D-Grand Rapids). “This was one of the first bills our new majority passed for good reason: the EITC has a legacy of being one of the best policies to support work while also helping families out of poverty, making it a win-win for Michigan workers and employers.”
House Speaker Joe Tate (D-Detroit) said lawmakers made the tax cut a priority to ensure working-class individuals and families get the money they are owed.
“Whether they use it to pay off holiday bills, make a necessary purchase or take a well-deserved vacation, this is just the latest example of putting the people of Michigan first and improving their quality of life,” he said.
Eligible Michiganders do not need to submit any additional paperwork to receive the tax credit, as the Department of Treasury will automatically process checks for Michiganders who submitted their 2022 tax return and confirm eligibility for the additional state credit. Checks will then be mailed on a rolling basis as soon as they are printed. It is estimated to take between five to six weeks to print and distribute all payments.
Those individuals who have moved frequently or recently and have concerns about their address accuracy, can manually update it through the Michigan Department of Treasury’s website.
Darienne Hudson, President and CEO of United Way for Southeastern Michigan, said the increase was something they had long advocated for as it will directly benefit more than two million Michigan children.
“This provides a meaningful lift to working families’ incomes, many of whom are still struggling in the wake of the pandemic as household budgets are strained by increasing costs and the expiration of covid-era financial supports,” she said.
The Michigan Earned Income Tax Credit for Working Families (Michigan EITC) provides a tax credit up to $2,080 for tax year 2022 and $2,229 for tax year 2023. The eligible credit amount depends on several factors – including income, filing status, number of “qualifying children” and disability status.
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