LANSING, Mich. (WOOD) — The Republican tax plan passed last month in Washington creates a potential tax increase for some people in Michigan.
However, Gov. Rick Snyder and Lt. Gov. Brian Calley say they have a solution. A $1.5 billion price tag could be coming to the people of Michigan in what the governor’s office is calling an unintended consequence of the legislation.
Calley says the fix is simple, but he thinks it needs to be done quickly.
“For the average family of four, the personal exemptions make a $680 difference a year in their taxes,” he said.
The changes at the state level are caused by the federal changes.
“Like a lot of states, our state attaches to the federal tax code for simplicity’s sake. So you figure something once at the federal level and we use those same numbers on our tax code so that you don’t have to recalculate,” Calley said.
The formula has worked up until now, but will change at the beginning of next year.
“Our state tax law says however many exemptions you claim at the federal level, you get to claim that at the state level,” Calley said. “Well now with this really big standard deduction, you won’t have people claiming personal exemptions at the federal level anymore and that will make a big difference for our taxpayers if we don’t make this change.”
To solve this problem, the Snyder administration is proposing to restore the personal exemption of $4000 per person now, and raise it to $4,500 in two years.
It’s likely the bill will be introduced soon and go through regular committee hearings to the floor. The biggest impediment could be that members who want even more tax changes will try to amend the bill.