HB 5507 Summary

• Establishes a declining income tax rate schedule beginning January 1, 2021, reducing from 4.25% to 4.15% (2021), 4.05% (2022), 3.95% (2023), and 3.9% (2024).

• Creates an automatic annual tax rate adjustment mechanism beginning January 1, 2025, reducing the rate if general fund revenue growth exceeds inflation rates in a given year.

• Defines the revenue cap baseline using 2022-2023 fiscal year general fund revenue multiplied by inflation adjustments, with any excess revenue triggering proportional income tax rate reductions.

• Designates the January revenue estimating conference as the mechanism for determining whether automatic rate adjustments are triggered each year.

• Modifies existing provisions regarding school aid fund deposits and Renew Michigan fund distributions to account for the new rate schedule.