SENATE BILL No. 1042
June 5, 2018, Introduced by Senators HANSEN and NOFS and referred to the Committee on Finance.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 506, 520, and 522 (MCL 206.506, 206.520, and
206.522), section 506 as amended by 1996 PA 484 and sections 520
and 522 as amended by 2015 PA 179; and to repeal acts and parts of
acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 506. (1) "Disabled veteran" means a veteran who meets 1
2 of the following criteria:
3 (a) Has been determined by the United States Department of
4 Veterans Affairs to be permanently and totally disabled as a result
5 of military service and entitled to veterans' benefits at the 100%
1 rate.
2 (b) Has a certificate from the United States Department of
3 Veterans Affairs, certifying that he or she is receiving or has
4 received pecuniary assistance due to disability for specially
5 adapted housing.
6 (c) Has been rated by the United States Department of Veterans
7 Affairs as individually unemployable.
8 (2) "Eligible serviceperson", "eligible veteran", and
9 "eligible widow or widower" means a serviceperson, veteran, or
10 widow or widower, whose income as defined in this chapter is not
11 more than $7,500.00 per year unless the serviceperson, veteran, or
12 widow or widower receives compensation paid by the veterans
13 administration or the armed forces of the United States for service
14 incurred disabilities and who meets the requirements of the
15 following schedule:
16
17
War Person Service in Disability % Taxable
18
War Value
19
Allowance
20
21
Indian Veteran or 3 months, or No $3,500.00
22
Civil veteran's widow 1 day with requirement
23
Spanish- or widower discharge
24
American for service-
25
Mexican connected
26
disability
27
1
World War I Widow or widower 3 months, or No $2,500.00
2
World War II of nondisabled 1 day with requirement
3
Korean or nonpensioned discharge
4
veteran for service-
5
connected
6
disability
7
8
All wars or Pensioned veteran Any No $3,500.00
9
presidential or veteran's requirement
10
executive widow or widower
11
order or
12
presidential
13
proclamation
14
15
All wars or Veteran with Any 10-50 $3,500.00
16
presidential service-connected
17
executive disability or
18
order or veteran's widow
19
presidential or widower
20
proclamation
21
22
All wars or Veteran with Any 60-70-80 $4,000.00
23
presidential service-connected
24
executive disability or
25
order or veteran's widow
26
presidential or widower
27
proclamation
1
2
All wars or Veteran with Any 90-100 $4,500.00
3
presidential service-connected
4
executive disability or
5
order or veteran's widow
6
presidential or widower
7
proclamation
8
9
All wars or Widow or widower Any No $4,500.00
10
presidential of veteran dying requirement
11
executive in service
12
order or
13
presidential
14
proclamation
15
16
Current Serviceperson or Any No $3,500.00
17
service serviceperson's requirement
18
widow or widower
19 Sec. 520. (1) Subject to the limitations and the definitions
20 in this chapter, a claimant may claim against the tax due under
21 this part for the tax year a credit for the property taxes on the
22 taxpayer's homestead deductible for federal income tax purposes
23 pursuant to section 164 of the internal revenue code, or that would
24 have been deductible if the claimant had not elected the zero
25 bracket amount or if the claimant had been subject to the federal
26 income tax. The property taxes used for the credit computation
27 shall not be greater than the amount levied for 1 tax year. An
1 owner is not eligible for a credit under this section if the
2 taxable value of his or her homestead excluding the portion of a
3 parcel of real property that is unoccupied and classified as
4 agricultural for ad valorem tax purposes in the year for which the
5 credit is claimed is greater than $135,000.00 through the 2021 tax
6 year. For tax years that begin after December 31, 2017, the taxable
7 value cap under this subsection does not apply to an owner who is a
8 disabled veteran or a widow or widower of a disabled veteran.
9 Beginning with the 2021 tax year and each tax year after 2021, the
10 taxable value cap under this subsection for the immediately
11 preceding tax year shall be adjusted by the percentage increase in
12 the United States consumer price index for the immediately
13 preceding calendar year and rounded to the nearest $100.00
14 increment. The department shall annualize the amount in this
15 subsection as necessary. As used in this subsection, "taxable
16 value" means that value determined under section 27a of the general
17 property tax act, 1893 PA 206, MCL 211.27a.
18 (2) A person who rents or leases a homestead may claim a
19 similar credit computed under this section and section 522 based
20 upon 20% of the gross rent paid for tax years before the 2018 tax
21 year or 23% of the gross rent paid for tax years after the 2017 tax
22 year. A person who rents or leases a homestead subject to a service
23 charge in lieu of ad valorem taxes as provided by section 15a of
24 the state housing development authority act of 1966, 1966 PA 346,
25 MCL 125.1415a, may claim a similar credit computed under this
26 section and section 522 based upon 10% of the gross rent paid.
27 (3) If the credit claimed under this section and section 522
1 exceeds the tax liability for the tax year or if there is no tax
2 liability for the tax year, the amount of the claim not used as an
3 offset against the tax liability shall, after examination and
4 review, be approved for payment, without interest, to the claimant.
5 In determining the amount of the payment under this subsection,
6 withholdings and other credits shall be used first to offset any
7 tax liabilities.
8 (4) If the homestead is an integral part of a multipurpose or
9 multidwelling building that is federally aided housing or state
10 aided housing, a claimant who is a senior citizen entitled to a
11 payment under subsection (2) may assign the right to that payment
12 to a mortgagor if the mortgagor reduces the rent charged and
13 collected on the claimant's homestead in an amount equal to the tax
14 credit payment provided in this chapter. The assignment of the
15 claim is valid only if the Michigan state housing development
16 authority, by affidavit, verifies that the claimant's rent has been
17 so reduced.
18 (5) Only the renter or lessee shall claim a credit on property
19 that is rented or leased as a homestead.
20 (6) A person who discriminates in the charging or collection
21 of rent on a homestead by increasing the rent charged or collected
22 because the renter or lessee claims and receives a credit or
23 payment under this chapter is guilty of a misdemeanor.
24 Discrimination against a renter who claims and receives the credit
25 under this section and section 522 by a reduction of the rent on
26 the homestead of a person who does not claim and receive the credit
27 is a misdemeanor. If discriminatory rents are charged or collected,
1 each charge or collection of the higher or lower payment is a
2 separate offense. Each acceptance of a payment of rent is a
3 separate offense.
4 (7) A person who received aid to families with dependent
5 children, state family assistance, or state disability assistance
6 pursuant to the social welfare act, 1939 PA 280, MCL 400.1 to
7 400.119b, in the tax year for which the person is filing a return
8 shall have a credit that is authorized and computed under this
9 section and section 522 reduced by an amount equal to the product
10 of the claimant's credit multiplied by the quotient of the sum of
11 the claimant's aid to families with dependent children, state
12 family assistance, and state disability assistance for the tax year
13 divided by the claimant's total household resources. The reduction
14 of credit shall not exceed the sum of the aid to families with
15 dependent children, state family assistance, and state disability
16 assistance for the tax year. For the purposes of this subsection,
17 aid to families with dependent children does not include child
18 support payments that offset or reduce payments made to the
19 claimant.
20 (8) For tax years before the 2018 tax year, a credit under
21 subsection (1) or (2) shall be reduced by 10% for each claimant
22 whose total household resources exceed the minimum total household
23 resources amount of $41,000.00 and by an additional 10% for each
24 increment of $1,000.00 of total household resources in excess of
25 $41,000.00. Except as otherwise provided under this subsection, for
26 the 2018 tax year and each tax year after 2018, the minimum total
27 household resources amount is $51,000.00. For the 2018 tax year and
1 each tax year after 2018, a credit under subsection (1) or (2)
2 shall be reduced by 10% for each claimant whose total household
3 resources exceed the minimum total household resources amount
4 established under this subsection and by an additional 10% for each
5 increment of $1,000.00 of total household resources in excess of
6 the minimum total household resources amount for that tax year. For
7 the 2021 tax year and each tax year after 2021, the minimum total
8 household resources threshold amount established under this
9 subsection for the immediately preceding tax year shall be adjusted
10 by the percentage increase in the United States consumer price
11 index for the immediately preceding calendar year and rounded to
12 the nearest $100.00 increment. For tax years that begin after
13 December 31, 2017, this subsection does not apply to a claimant who
14 is a disabled veteran or a widow or widower of a disabled veteran.
15 (9) If the credit authorized and calculated under this section
16 and section 522 and adjusted under subsection (7) or (8) does not
17 provide to a senior citizen who rents or leases a homestead that
18 amount attributable to rent that constitutes more than 40% of the
19 total household resources of the senior citizen, the senior citizen
20 may claim a credit based upon the amount of total household
21 resources attributable to rent as provided by this section.
22 (10) A senior citizen whose gross rent paid for the tax year
23 is more than the percentage of total household resources specified
24 in subsection (9) for the respective tax year may claim a credit
25 for the amount of rent paid that constitutes more than the
26 percentage of the total household resources of the senior citizen
27 specified in subsection (9) and that was not provided to the senior
1 citizen by the credit computed pursuant to this section and section
2 522 and adjusted pursuant to subsection (7) or (8).
3 (11) The department may promulgate rules to implement
4 subsections (9) to (15) and may prescribe a table to allow a
5 claimant to determine the credit provided under this section and
6 section 522 in the instruction booklet that accompanies the
7 respective income tax or property tax credit forms used by
8 claimants.
9 (12) A senior citizen and disabled veteran may claim the
10 credit under subsections (9) to (15) on the same form as the
11 property tax credit permitted by subsection (2). The department
12 shall adjust the forms accordingly.
13 (13) A senior citizen who moves to a different rented or
14 leased homestead shall determine, for 2 tax years after the move,
15 both his or her qualification to claim a credit under subsections
16 (9) to (15) and the amount of a credit under subsections (9) to
17 (15) on the basis of the annualized final monthly rental payment at
18 his or her previous homestead, if this annualized rental is less
19 than the senior citizen's actual annual rental payments.
20 (14) For a return of less than 12 months, the claim for a
21 credit under subsections (9) to (15) shall be reduced
22 proportionately.
23 (15) For tax years before the 2018 tax year, the total credit
24 allowed by this section and section 522 shall not exceed $1,200.00
25 per year. Except as otherwise provided under this subsection, for
26 the 2018 tax year and each tax year after 2018, the total credit
27 allowed by this section and section 522 shall not exceed $1,500.00
1 per year. Beginning with the 2021 tax year and each tax year after
2 2021, the maximum amount of the credit allowed under this section
3 and section 522 for the immediately preceding tax year shall be
4 adjusted by the percentage increase in the United States consumer
5 price index for the immediately preceding calendar year. The
6 department shall round the amount to the nearest $100.00 increment.
7 For tax years that begin after December 31, 2017, this subsection
8 does not apply to a claimant who is a disabled veteran or a widow
9 or widower of a disabled veteran.
10 (16) As used in this section, "United States consumer price
11 index" means the United States consumer price index for all urban
12 consumers as defined and reported by the United States Department
13 of Labor, Bureau of Labor Statistics.
14 Sec. 522. (1) The amount of a claim made pursuant to this
15 chapter shall be determined as follows:
16 (a) A claimant who is not a senior citizen or a disabled
17 veteran is entitled to a credit against the state income tax
18 liability under this part equal to 60% of the amount by which the
19 property taxes on the homestead, or the credit for rental of the
20 homestead for the tax year, exceeds 3.5% of the claimant's total
21 household resources for tax years before the 2018 tax year or 3.2%
22 of the claimant's total household resources for the 2018 tax year
23 and each tax year after 2018.
24 (b) A claimant who is a senior citizen is entitled to a credit
25 against the state income tax liability under this part equal to the
26 following:
27 (i) For a claimant with total household resources of
1 $21,000.00 or less, an amount as determined in accordance with
2 subdivision (c).
3 (ii) For a claimant with total household resources of more
4 than $21,000.00 and less than or equal to $22,000.00, an amount
5 equal to 96% of the difference between the property taxes on the
6 homestead or the credit for rental of the homestead for the tax
7 year and 3.5% of total household resources for tax years before the
8 2018 tax year or 3.2% of total household resources for the 2018 tax
9 year and each tax year after 2018.
10 (iii) For a claimant with total household resources of more
11 than $22,000.00 and less than or equal to $23,000.00, an amount
12 equal to 92% of the difference between the property taxes on the
13 homestead or the credit for rental of the homestead for the tax
14 year and 3.5% of total household resources for tax years before the
15 2018 tax year or 3.2% of total household resources for the 2018 tax
16 year and each tax year after 2018.
17 (iv) For a claimant with total household resources of more
18 than $23,000.00 and less than or equal to $24,000.00, an amount
19 equal to 88% of the difference between the property taxes on the
20 homestead or the credit for rental of the homestead for the tax
21 year and 3.5% of total household resources for tax years before the
22 2018 tax year or 3.2% of total household resources for the 2018 tax
23 year and each tax year after 2018.
24 (v) For a claimant with total household resources of more than
25 $24,000.00 and less than or equal to $25,000.00, an amount equal to
26 84% of the difference between the property taxes on the homestead
27 or the credit for rental of the homestead for the tax year and 3.5%
1 of total household resources for tax years before the 2018 tax year
2 or 3.2% of total household resources for the 2018 tax year and each
3 tax year after 2018.
4 (vi) For a claimant with total household resources of more
5 than $25,000.00 and less than or equal to $26,000.00, an amount
6 equal to 80% of the difference between the property taxes on the
7 homestead or the credit for rental of the homestead for the tax
8 year and 3.5% of total household resources for tax years before the
9 2018 tax year or 3.2% of total household resources for the 2018 tax
10 year and each tax year after 2018.
11 (vii) For a claimant with total household resources of more
12 than $26,000.00 and less than or equal to $27,000.00, an amount
13 equal to 76% of the difference between the property taxes on the
14 homestead or the credit for rental of the homestead for the tax
15 year and 3.5% of total household resources for tax years before the
16 2018 tax year or 3.2% of total household resources for the 2018 tax
17 year and each tax year after 2018.
18 (viii) For a claimant with total household resources of more
19 than $27,000.00 and less than or equal to $28,000.00, an amount
20 equal to 72% of the difference between the property taxes on the
21 homestead or the credit for rental of the homestead for the tax
22 year and 3.5% of total household resources for tax years before the
23 2018 tax year or 3.2% of total household resources for the 2018 tax
24 year and each tax year after 2018.
25 (ix) For a claimant with total household resources of more
26 than $28,000.00 and less than or equal to $29,000.00, an amount
27 equal to 68% of the difference between the property taxes on the
1 homestead or the credit for rental of the homestead for the tax
2 year and 3.5% of total household resources for tax years before the
3 2018 tax year or 3.2% of total household resources for the 2018 tax
4 year and each tax year after 2018.
5 (x) For a claimant with total household resources of more than
6 $29,000.00 and less than or equal to $30,000.00, an amount equal to
7 64% of the difference between the property taxes on the homestead
8 or the credit for rental of the homestead for the tax year and 3.5%
9 of total household resources for tax years before the 2018 tax year
10 or 3.2% of total household resources for the 2018 tax year and each
11 tax year after 2018.
12 (xi) For a claimant with total household resources of more
13 than $30,000.00, an amount equal to 60% of the difference between
14 the property taxes on the homestead or the credit for rental of the
15 homestead for the tax year and 3.5% of total household resources
16 for tax years before the 2018 tax year or 3.2% of total household
17 resources for the 2018 tax year and each tax year after 2018.
18 (c) A claimant who is a senior citizen with total household
19 resources of $21,000.00 or less or a paraplegic, hemiplegic, or
20 quadriplegic and for tax years that begin after December 31, 1999,
21 a claimant who is totally and permanently disabled, deaf, or, for
22 tax years that begin after December 31, 2012, blind is entitled to
23 a credit against the state income tax liability for the amount by
24 which the property taxes on the homestead, the credit for rental of
25 the homestead, or a service charge in lieu of ad valorem taxes as
26 provided by section 15a of the state housing development authority
27 act of 1966, 1966 PA 346, MCL 125.1415a, for the tax year exceeds
1 the percentage of the claimant's total household resources for that
2 tax year computed as follows:
3
Total household resources Percentage
4
Not over $3,000.00 .0%
5
Over $3,000.00 but not over $4,000.00 1.0%
6
Over $4,000.00 but not over $5,000.00 2.0%
7
Over $5,000.00 but not over $6,000.00 3.0%
8
Over $6,000.00 for tax years before
9
the 2018 tax year 3.5%
10
Over $6,000.00 for tax years after
11
the 2017 tax year 3.2%
12 (d) A claimant who is an eligible serviceperson, eligible
13 veteran, or eligible widow or widower is entitled to a credit
14 against the state income tax liability for a percentage of the
15 property taxes on the homestead for the tax year not in excess of
16 100% determined as follows:
17 (i) Divide the taxable value allowance specified in section
18 506 by the taxable value of the homestead or, if the eligible
19 serviceperson, eligible veteran, or eligible widow or widower
20 leases or rents a homestead, divide 20% of the total annual rent
21 paid for tax years before the 2018 tax year or 23% of the total
22 annual rent paid for tax years after the 2017 tax year on the
23 property by the property tax rate on the property.
24 (ii) Multiply the property taxes on the homestead by the
25 percentage computed in subparagraph (i).
26 (e) A claimant who is blind is entitled to a credit against
27 the state income tax liability for a percentage of the property
1 taxes on the homestead for the tax year determined as follows:
2 (i) If the taxable value of the homestead is $3,500.00 or
3 less, 100% of the property taxes.
4 (ii) If the taxable value of the homestead is more than
5 $3,500.00, the percentage that $3,500.00 bears to the taxable value
6 of the homestead.
7 (f) For tax years that begin after December 31, 2017, a
8 claimant who is a disabled veteran or a widow or widower of a
9 disabled veteran is entitled to a credit against the state income
10 tax liability in an amount equal to 100% of the property taxes on
11 the homestead for the tax year.
12 (2) A person who is qualified to make a claim under more than
13 1 classification shall elect the classification under which the
14 claim is made.
15 (3) Only 1 claimant per household for a tax year is entitled
16 to the credit, unless both the husband and wife filing a joint
17 return are blind, then each shall be considered a claimant.
18 (4) As used in this section, "totally and permanently
19 disabled" means disability as defined in section 216 of title II of
20 the social security act, 42 USC 416.
21 (5) A senior citizen who has total household resources for the
22 tax year of $6,000.00 or less and who for 1973 received a senior
23 citizen homestead exemption under former section 7c of the general
24 property tax act, 1893 PA 206, may compute the credit against the
25 state income tax liability for a percentage of the property taxes
26 on the homestead for the tax year determined as follows:
27 (a) If the taxable value of the homestead is $2,500.00 or
1 less, 100% of the property taxes.
2 (b) If the taxable value of the homestead is more than
3 $2,500.00, the percentage that $2,500.00 bears to the taxable value
4 of the homestead.
5 (6) For a return of less than 12 months, the claim shall be
6 reduced proportionately.
7 (7) The department may prescribe tables that may be used to
8 determine the amount of the claim.
9 (8) The total credit allowed in this section for each year
10 shall not exceed the amount determined under section 520.
11 (9) The total credit allowable under this part and part 361 of
12 the natural resources and environmental protection act, 1994 PA
13 451, MCL 324.36101 to 324.36117, 324.36116, shall not exceed the
14 total property tax due and payable by the claimant in that year.
15 The amount by which the credit exceeds the property tax due and
16 payable shall be deducted from the credit claimed under part 361 of
17 the natural resources and environmental protection act, 1994 PA
18 451, MCL 324.36101 to 324.36117.324.36116.
19 Enacting section 1. Section 7b of the general property tax
20 act, 1893 PA 206, MCL 211.7b, is repealed effective December 31,
21 2017.