HB 4170 Michigan House · 2025-2026 Regular Session

Individual income tax: rate; rollback of rate to 4.05% and effect of a triggering rate reduction; provide for, and clarify permanency. Amends sec. 51 of 1967 PA 281 (MCL 206.51).

HB 4170 permanently sets Michigan's individual income tax rate at 4.05% for all taxpayers, replacing a temporary 4.25% rate scheduled to take effect in 2024. It creates a mechanism where the rate could decrease further if state revenue growth exceeds inflation, requiring annual revenue reviews. The bill directly affects all Michigan residents who pay individual income tax. The change takes effect immediately for tax years beginning January 1, 2025, with the 4.05% rate now permanent unless triggered by the revenue growth condition.

Issues: ✓ Budget & Taxes

Bill status passed both 4 of 5 stages cleared

Introduction

Mar 2025

Committee Review

Mar 2025

House Passage

Mar 2025

Senate Passage

Mar 2025

Governor

Introduced Mar 5, 2025 Last action Mar 20, 2025

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What changed between versions

House Introduced Bill → As Passed by the House · 5 edits · Mar 18, 2025

MODERATE

This bill amends Michigan's income tax rates and establishes a mechanism to automatically reduce the income tax rate if state revenue growth outpaces inflation. It also updates various tax deposit percentages to state funds and clarifies definitions related to taxable income and revenue calculations.

Scope change

The bill maintains the same scope of applying to individuals and non-corporate entities but modifies the specific tax rates and conditions under which they are applied.

TIMELINE

Tax rate schedule was updated with new effective dates, including a 4.05% rate starting January 1, 2025, and provisions for future rate adjustments based on revenue growth.

REQUIREMENT

A new automatic rate reduction mechanism was added that requires state officials to calculate and implement tax rate reductions if general fund revenue growth exceeds inflation rates.

FISCAL

Tax deposit percentages to the state school aid fund were updated for various fiscal years, with new rates specified for periods through 2026.

A requirement was added to deposit $69 million annually into the Renew Michigan fund starting with the 2022-2023 fiscal year, subject to certain conditions.

DEFINITION

New definitions were added for key terms including 'Capped general fund/general purpose revenue,' 'Current rate,' 'Total general fund/general purpose revenue,' 'Consumer Price Index,' 'Inflation rate,' and 'Taxable income'.

Floor votes · House Mar 18, 2025

How they voted

This bill passed the Senate by voice vote (no roll call recorded).

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Mar 20, 2025

Committee

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION

upper

Mar 20, 2025

Upper · Passed

PASSED BY HOUSE WITH IMMEDIATE EFFECT

upper

Mar 18, 2025

Lower · Passed

passed; given immediate effect Roll Call #32 Yeas 65 Nays 43 Excused 0 Not Voting 2

lower

Mar 11, 2025

Committee

referred to second reading

lower

Mar 11, 2025

Lower · Passed

reported with recommendation without amendment

lower

Mar 5, 2025

Committee

referred to Committee on Finance

lower

Mar 5, 2025

Introduced

introduced by Representative Rep. Kathy Schmaltz

lower

1 primary · 23 co-sponsors