Michigan taxpayers who claimed Earned Income Tax Credit could see extra refund under bill

The deadline to file taxes passed last week, but some Michigan taxpayers could see an extra boost to their return after lawmakers in the Michigan Senate approved a bill Thursday to deliver checks to low-income earners who qualify for an expanded credit currently slated to take effect next year.

The federal Earned Income Tax Credit (EITC) benefits low-income workers by essentially subsidizing their wages. Like many states, Michigan has a state EITC — what lawmakers call the Working Families Tax Credit — set at a share of the federal credit. Michigan's credit is currently among the least generous in the country.

But earlier this year, Gov. Gretchen Whitmer approved a tax overhaul to expand the Working Families Tax Credit from 6% to 30% of the federal credit. Democrats did not garner enough GOP support for the tax bill, which also provides relief for retirees, to have immediate effect, delaying its implementation until next tax year.

Senate Bill 144 would allow those who claimed the EITC in their 2022 filing to claim the expanded credit for the 2022 tax year only. The legislation directs the Department of Treasury to determine the additional credit individuals would be eligible to receive and provide refund checks. It would cost the state approximately $441.6 million, according to the Senate Fiscal Agency.

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"The money is already allocated inside the legislation we have already passed and the governor has signed. So, essentially this allows those dollars to be released right now when families are struggling to pay for milk and cereal and bread," said bill sponsor state Sen. Kristen McDonald Rivet-Bay City, in a floor speech. Over 1 million working families qualify for the expanded Working Families Tax Credit approved earlier this year, she said.

Her bill passed in the state Senate 27-10 with the support of every Democratic lawmaker and seven Republicans.

GOP state Sen. Joe Bellino, R-Monroe, supported the bill but blasted the path to the vote Thursday.

"I am frustrated at how long it has taken to get this over the finish line, despite repeated bipartisan votes," he said on the floor. He accused Democrats of playing political games by folding the proposal for expanding the Working Families Tax Credit into the larger package that also committed corporate tax revenue to state economic development spending and could have stopped an across the board state income tax cut from taking effect. "We're right back where we started in January, voting on a first chamber bill that can't become law for several more weeks at a minimum," Bellino said.

While the Michigan Senate did not vote on whether to give the bill immediate effect, the bipartisan support for the legislation indicates it will garner the two-thirds vote needed for the tax relief to kick in before the next tax year.

Lawmakers in the state House must approve the bill before it can head to Whitmer for her signature.

Clara Hendrickson fact-checks Michigan issues and politics as a corps member with Report for America, an initiative of The GroundTruth Project. Make a tax-deductible contribution to support her work at bit.ly/freepRFA. Contact her at chendrickson@freepress.com or 313-296-5743. Follow her on Twitter @clarajanehen.

This article originally appeared on Detroit Free Press: Earned Income Tax Credit: Michigan bill would give refund checks