Strong state revenues are likely to lower the income tax

LANSING — A state revenue boom is likely to lower the state’s income tax rate for the 2023 tax year, from 4.25% to 4.05%, the House Public Finance Agency said in a report released Thursday.

The Michigan House of Commons fiscal agency says strong state tax revenues could lead to a lower state income tax rate.

The income tax cut, if enacted, would cost the state general fund something in the region of $660 million annually, triggered by a 2015 law designed to lower the income tax rate when state general fund revenues exceed certain levels.

The report said House fiscal experts cannot make the call with certainty until the final numbers for fiscal 2022 are released.

However, “based on the primary revenue of the General Fund for fiscal year 2021-22, the trigger effect will kick in and lower the income tax rate in TY (tax year) 2023 to 4.05%,” the report said.

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