On October 1, 2007, the Michigan State Legislature reached an agreement regarding revenue increases to balance the 2007-2008 State Budget.

The Michigan income tax withholding rates rise effective immediately from the current 3.9% to 4.35%. The bill was written so that the rate will decrease from 4.35% to 3.95% in .1% annual increments beginning October 1, 2011. On October 1, 2015, it will decrease to 3.90%.

• A single individual making $100,000 a year would pay $434 more per year.
• A married couple earning $42,000 a year would pay $158 more per year.
• A married couple earning $73,000 a year would pay $297 more per year.
• A married couple earning $100,000 a year would pay $419 more per year.
• A married couple with two children and $42,000 in income would pay $121 more per year.
• A married couple with two children and $73,000 in income would pay $260 more per year.
• A married couple with two children and $100,000 in income would pay $382 more per year.

The 2007 income tax rate will be annualized for the calculation of taxes, based on the 3.9% for January 1 through September 30, 2007, and 4.35% for October 1 through December 31, 2007.

Click here to access Michigan tax withholding tables (pdf document).

Click here to access Michigan legislature documents regarding House Bill 5194.

Expansion of the 6% Michigan Sales Tax to selected services effective December 1, 2007 was repealed and replaced by modifications to the Michigan Business Tax.

Click here for more information about the Michigan Business Tax.

Changes in public school employee health insurance and pension benefits rules allow school districts, community colleges and local governments to pool their workers’ healthcare benefits with other school districts and/or local governments to better manage healthcare costs. It also requires that public employers “competitively solicit bids for healthcare benefits.”

Click here to access information regarding Michigan Senate Bills 546 and 547 (pdf document).

Please contact your Yeo & Yeo tax professional for more information.