HB 4781 Summary

• Increases Michigan corporate income tax rate from 6.0% to 8.5% for tax years beginning 2020 and after, while modifying personal income tax deductions for retirement and pension benefits.

• Creates a new flow-through entity tax imposed at 8.5% on S corporations, partnerships, and limited liability companies beginning in 2020, with credits available to individual members to avoid double taxation.

• Establishes new deduction options for individuals born 1946-1952 and after 1952, allowing unrestricted deductions of $20,000-$40,000 (single/joint returns) for those age 67+ instead of limited retirement benefit deductions.

• Allocates 29.4% of individual income tax revenue to the Fixing Michigan Roads Fund starting October 1, 2020, with flow-through entity tax revenue distributed 9.2% to school aid fund, 32.0% to general fund, and remainder to roads fund.

• Bill is contingent on enactment of HB 4782 and takes effect January 1, 2020 for tax years beginning on or after that date.