HB 5404 Summary

• Modifies Michigan income tax calculations to use state-specific dependent exemptions instead of tracking federal exemptions, allowing taxpayers to claim exemptions even if they cannot claim them federally.

• Increases personal exemption amounts: $3,950 (Oct 2012-Dec 2013), $4,000 (2014-2017), $4,200 (2018), $4,300 (2019), $4,400 (2020), and $4,500 (2021+).

• Adds deductions for ABLE savings accounts (education savings for disabled individuals) and makes various technical corrections to capitalization and formatting of existing tax provisions.

• Repeals section 30e and removes the limitation that dependent exemptions must be claimed on federal returns, clarifying that state tax purposes are independent of federal dependency status.

• Raises the income threshold for tax-exempt status for dependents claimed by other taxpayers from an undefined amount to $1,500 in adjusted gross income.