Many Tax Limits Affecting Businesses Have Increased For 2023

Michigan Residents to See Income Tax Cut This Year

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The Michigan treasury department has confirmed that a tax cut triggered by the state’s budget surplus will go into effect for 2023.

The income tax will decrease from 4.25% to 4.05%, the lowest income tax rate since 2007. It will amount to $650 million going back to Michigan residents. For an unmarried filer with no children making about $52,500 a year, the state’s median income for workers in 2021, it means a reduction of about $95 over the next year. The average taxpayer, the Michigan Department of Treasury said in a release, will save about $50.

The tax change will be effective as of January 1, 2023. Withholding in paychecks will remain the same. When Michiganders file their 2023 state income taxes in 2024, they will see the rate adjustment in the form of less tax owed or a larger refund.

The tax cut is the result of a 2015 law that required the rate to go into effect if Michigan’s general fund grew faster than the rate of inflation beginning in 2023. The state’s massive budget surplus triggered the tax cut. Lawmakers will need to determine if the cut will be temporary for one year, or a permanent reduction.

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