MI HB6117

Creates a new optional deduction framework (subsection 10) allowing taxpayers born after 1945 to deduct increasing percentages of retirement or pension benefits in 2022-2024, reaching 100% deduction by 2025, as an alternative to existing subsection (9) limitations.

For 2022 tax year, allows taxpayers born 1946-1957 to deduct up to 25% of maximum retirement/pension benefits; for 2023, those born 1946-1961 may deduct up to 50%; for 2024, those born 1946-1965 may deduct up to 75%.

Beginning 2025 and thereafter, permits full deduction of retirement or pension benefits under subsection (1)(f) without the age and income restrictions currently imposed under subsection (9).

Modifies school aid fund distribution formula effective October 1, 2022, adjusting the percentage of income tax collections deposited to the state school aid fund from 1.012% to 1.019% (2022-2023), 1.031% (2023-2024), and 1.045% (2024 forward).

Adds income tax rate reduction mechanism for tax years beginning January 1, 2023 forward if general fund revenue growth exceeds inflation rate, with reduction calculated based on excess revenue comparison to capped baseline.