HOUSE BILL NO. 4290
February 23, 2021, Introduced by Reps.
Manoogian, Hall, Tisdel and Damoose and referred to the Committee on Tax
Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 30 (MCL 206.30), as amended by 2020 PA 65.
The people of the state of michigan enact:
Sec. 30. (1)
"Taxable income" means, for a person other than a corporation,
estate, or trust, adjusted gross income as defined in the internal revenue code
subject to the following adjustments under this section:
(a) Add gross interest income and dividends derived from
obligations or securities of states other than Michigan, in the same amount
that has been excluded from adjusted gross income less related expenses not
deducted in computing adjusted gross income because of section 265(a)(1) of the
internal revenue code.
(b) Add taxes on or measured by income to the extent the
taxes have been deducted in arriving at adjusted gross income.
(c) Add losses on the sale or exchange of obligations of the
United States government, the income of which this state is prohibited from
subjecting to a net income tax, to the extent that the loss has been deducted
in arriving at adjusted gross income.
(d) Deduct, to the extent included in adjusted gross income,
income derived from obligations, or the sale or exchange of obligations, of the
United States government that this state is prohibited by law from subjecting
to a net income tax, reduced by any interest on indebtedness incurred in
carrying the obligations and by any expenses incurred in the production of that
income to the extent that the expenses, including amortizable bond premiums,
were deducted in arriving at adjusted gross income.
(e) Deduct, to the extent included in adjusted gross income,
the following:
(i) Compensation,
including retirement or pension benefits, received for services in the Armed
Forces of the United States.
(ii) Retirement or pension benefits under the railroad
retirement act of 1974, 45 USC 231 to 231v.
(iii) Beginning January 1, 2012, retirement or pension benefits
received for services in the Michigan National Guard.
(f) Deduct the following
to the extent included in adjusted gross income subject to the limitations and
restrictions set forth in subsection (9):
(i) Retirement or pension benefits received from a federal
public retirement system or from a public retirement system of or created by
this state or a political subdivision of this state.
(ii) Retirement or pension benefits received from a public
retirement system of or created by another state or any of its political
subdivisions if the income tax laws of the other state permit a similar
deduction or exemption or a reciprocal deduction or exemption of a retirement
or pension benefit received from a public retirement system of or created by
this state or any of the political subdivisions of this state.
(iii) Social Security benefits as defined in section 86 of the
internal revenue code.
(iv) Beginning on and after January 1, 2007, retirement or
pension benefits not deductible under subparagraph (i) or
subdivision (e) from any other retirement or pension system or benefits from a
retirement annuity policy in which payments are made for life to a senior
citizen, to a maximum of $42,240.00 for a single return and $84,480.00 for a
joint return. The maximum amounts allowed under this subparagraph shall be
reduced by the amount of the deduction for retirement or pension benefits
claimed under subparagraph (i) or subdivision (e) and
by the amount of a deduction claimed under subdivision (p). For the 2008 tax
year and each tax year after 2008, the maximum amounts allowed under this
subparagraph shall be adjusted by the percentage increase in the United States
Consumer Price Index for the immediately preceding calendar year. The
department shall annualize the amounts provided in this subparagraph as
necessary. As used in this subparagraph, "senior
citizen" means that term as defined in section 514.
(v) The amount determined to be the section 22 amount eligible
for the elderly and the permanently and totally disabled credit provided in
section 22 of the internal revenue code.
(g) Adjustments
resulting from the application of section 271.
(h) Adjustments with
respect to estate and trust income as provided in section 36.
(i) Adjustments
resulting from the allocation and apportionment provisions of chapter 3.
(j) Deduct the following
payments made by the taxpayer in the tax year:
(i) For the 2010 tax year and each tax year after 2010, the
amount of a charitable contribution made to the advance tuition payment fund
created under section 9 of the Michigan education trust act, 1986 PA 316, MCL
390.1429.
(ii) The amount of payment made under an advance tuition payment
contract as provided in the Michigan education trust act, 1986 PA 316, MCL
390.1421 to 390.1442.
(iii) The amount of payment made under a contract with a private
sector investment manager that meets all of the following criteria:
(A) The contract is
certified and approved by the board of directors of the Michigan education
trust to provide equivalent benefits and rights to purchasers and beneficiaries
as an advance tuition payment contract as described in subparagraph (ii).
(B) The contract applies
only for a state institution of higher education as defined in the Michigan
education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, or a community or
junior college in Michigan.
(C) The contract
provides for enrollment by the contract's qualified beneficiary in not less
than 4 years after the date on which the contract is entered into.
(D) The contract is
entered into after either of the following:
(I) The purchaser has
had his or her offer to enter into an advance tuition payment contract rejected
by the board of directors of the Michigan education trust, if the board
determines that the trust cannot accept an unlimited number of enrollees upon
an actuarially sound basis.
(II) The board of
directors of the Michigan education trust determines that the trust can accept
an unlimited number of enrollees upon an actuarially sound basis.
(k) If an advance
tuition payment contract under the Michigan education trust act, 1986 PA 316,
MCL 390.1421 to 390.1442, or another contract for which the payment was
deductible under subdivision (j) is terminated and the qualified beneficiary
under that contract does not attend a university, college, junior or community
college, or other institution of higher education, add the amount of a refund
received by the taxpayer as a result of that termination or the amount of the
deduction taken under subdivision (j) for payment made under that contract,
whichever is less.
(l) Deduct from the taxable income of a purchaser the amount
included as income to the purchaser under the internal revenue code after the
advance tuition payment contract entered into under the Michigan education
trust act, 1986 PA 316, MCL 390.1421 to 390.1442, is terminated because the
qualified beneficiary attends an institution of postsecondary education other
than either a state institution of higher education or an institution of
postsecondary education located outside this state with which a state
institution of higher education has reciprocity.
(m) Add, to the extent
deducted in determining adjusted gross income, the net operating loss deduction
under section 172 of the internal revenue code.
(n) Deduct a net
operating loss deduction for the taxable year as determined under section 172
of the internal revenue code subject to the modifications under section
172(b)(2) of the internal revenue code and subject to the allocation and
apportionment provisions of chapter 3 for the taxable year in which the loss
was incurred.
(o) Deduct, to the
extent included in adjusted gross income, benefits from a discriminatory
self-insurance medical expense reimbursement plan.
(p) Beginning on and
after January 1, 2007, subject to any limitation provided in this subdivision,
a taxpayer who is a senior citizen may deduct to the extent included in
adjusted gross income, interest, dividends, and capital gains received in the
tax year not to exceed $9,420.00 for a single return and $18,840.00 for a joint
return. The maximum amounts allowed under this subdivision shall be reduced by
the amount of a deduction claimed for retirement or pension benefits under
subdivision (e) or a deduction claimed under subdivision (f)(i), (ii), (iv), or (v). For the 2008 tax year
and each tax year after 2008, the maximum amounts allowed under this
subdivision shall be adjusted by the percentage increase in the United States
Consumer Price Index for the immediately preceding calendar year. The
department shall annualize the amounts provided in this subdivision as
necessary. Beginning January 1, 2012, the deduction under this subdivision is
not available to a senior citizen born after 1945. As
used in this subdivision, "senior citizen" means that term as defined
in section 514.
(q) Deduct, to the
extent included in adjusted gross income, all of the following:
(i) The amount of a refund received in the tax year based on
taxes paid under this part.
(ii) The amount of a refund received in the tax year based on
taxes paid under the city income tax act, 1964 PA 284, MCL 141.501 to 141.787.
(iii) The amount of a credit received in the tax year based on a
claim filed under sections 520 and 522 to the extent that the taxes used to
calculate the credit were not used to reduce adjusted gross income for a prior
year.
(r) Add the amount paid
by the state on behalf of the taxpayer in the tax year to repay the outstanding
principal on a loan taken on which the taxpayer defaulted that was to fund an
advance tuition payment contract entered into under the Michigan education
trust act, 1986 PA 316, MCL 390.1421 to 390.1442, if the cost of the advance
tuition payment contract was deducted under subdivision (j) and was financed
with a Michigan education trust secured loan.
(s) Deduct, to the
extent included in adjusted gross income, any amount, and any interest earned
on that amount, received in the tax year by a taxpayer who is a Holocaust
victim as a result of a settlement of claims against any entity or individual
for any recovered asset pursuant to the German act regulating unresolved
property claims, also known as Gesetz zur Regelung offener Vermogensfragen, as
a result of the settlement of the action entitled In re: Holocaust victim assets litigation, CV-96-4849, CV-96-5161,
and CV-97-0461 (E.D. NY), or as a result of any similar action if the income
and interest are not commingled in any way with and are kept separate from all
other funds and assets of the taxpayer. As used in this subdivision:
(i) "Holocaust victim" means a person, or the heir or
beneficiary of that person, who was persecuted by Nazi Germany or any Axis
regime during any period from 1933 to 1945.
(ii) "Recovered asset" means any asset of any type and
any interest earned on that asset including, but not limited to, bank deposits,
insurance proceeds, or artwork owned by a Holocaust victim during the period
from 1920 to 1945, withheld from that Holocaust victim from and after 1945, and
not recovered, returned, or otherwise compensated to the Holocaust victim until
after 1993.
(t) Deduct all of the
following:
(i) To the extent not deducted in determining adjusted gross
income, contributions made by the taxpayer in the tax year less qualified withdrawals
made in the tax year from education savings accounts, calculated on a per
education savings account basis, pursuant to the Michigan education savings
program act, 2000 PA 161, MCL 390.1471 to 390.1486, not to exceed a total
deduction of $5,000.00 for a single return or $10,000.00 for a joint return per
tax year. The amount calculated under this subparagraph for each education
savings account shall not be less than zero.
(ii) To the extent included in adjusted gross income, interest
earned in the tax year on the contributions to the taxpayer's education savings
accounts if the contributions were deductible under subparagraph (i).
(iii) To the extent included in adjusted gross income,
distributions that are qualified withdrawals from an education savings account
to the designated beneficiary of that education savings account.
(u) Add, to the extent
not included in adjusted gross income, the amount of money withdrawn by the
taxpayer in the tax year from education savings accounts, not to exceed the
total amount deducted under subdivision (t) in the tax year and all previous
tax years, if the withdrawal was not a qualified withdrawal as provided in the
Michigan education savings program act, 2000 PA 161, MCL 390.1471 to 390.1486.
This subdivision does not apply to withdrawals that are less than the sum of
all contributions made to an education savings account in all previous tax
years for which no deduction was claimed under subdivision (t), less any
contributions for which no deduction was claimed under subdivision (t) that
were withdrawn in all previous tax years.
(v) A taxpayer who is a
resident tribal member may deduct, to the extent included in adjusted gross
income, all nonbusiness income earned or received in the tax year and during
the period in which an agreement entered into between the taxpayer's tribe and
this state pursuant to section 30c of 1941 PA 122, MCL 205.30c, is in full
force and effect. As used in this subdivision:
(i) "Business income" means business income as
defined in section 4 and apportioned under chapter 3.
(ii) "Nonbusiness income" means nonbusiness income as
defined in section 14 and, to the extent not included in business income, all
of the following:
(A) All income derived
from wages whether the wages are earned within the agreement area or outside of
the agreement area.
(B) All interest and
passive dividends.
(C) All rents and
royalties derived from real property located within the agreement area.
(D) All rents and
royalties derived from tangible personal property, to the extent the personal
property is utilized within the agreement area.
(E) Capital gains from
the sale or exchange of real property located within the agreement area.
(F) Capital gains from
the sale or exchange of tangible personal property located within the agreement
area at the time of sale.
(G) Capital gains from
the sale or exchange of intangible personal property.
(H) All pension income
and benefits including, but not limited to, distributions from a 401(k) plan,
individual retirement accounts under section 408 of the internal revenue code,
or a defined contribution plan, or payments from a defined benefit plan.
(I) All per capita
payments by the tribe to resident tribal members, without regard to the source
of payment.
(J) All gaming winnings.
(iii) "Resident tribal member" means an individual who
meets all of the following criteria:
(A) Is an enrolled
member of a federally recognized tribe.
(B) The individual's
tribe has an agreement with this state pursuant to section 30c of 1941 PA 122,
MCL 205.30c, that is in full force and effect.
(C) The individual's
principal place of residence is located within the agreement area as designated
in the agreement under sub-subparagraph (B).
(w) For tax years
beginning after December 31, 2011, eliminate all of the following:
(i) Income from producing oil and gas to the extent included in
adjusted gross income.
(ii) Expenses of producing oil and gas to the extent deducted in
arriving at adjusted gross income.
(x) For tax years that
begin after December 31, 2015, deduct all of the following:
(i) To the extent not deducted in determining adjusted gross
income, contributions made by the taxpayer in the tax year less qualified
withdrawals made in the tax year from an ABLE savings account, pursuant to the
Michigan achieving a better life experience (ABLE) program act, 2015 PA 160,
MCL 206.981 to 206.997, not to exceed a total deduction of $5,000.00 for a
single return or $10,000.00 for a joint return per tax year. The amount
calculated under this subparagraph for an ABLE savings account shall not be
less than zero.
(ii) To the extent included in adjusted gross income, interest
earned in the tax year on the contributions to the taxpayer's ABLE savings
account if the contributions were deductible under subparagraph (i).
(iii) To the extent included in adjusted gross income,
distributions that are qualified withdrawals from an ABLE savings account to
the designated beneficiary of that ABLE savings account.
(y) For tax years that
begin after December 31, 2015, add, to the extent not included in adjusted
gross income, the amount of money withdrawn by the taxpayer in the tax year
from an ABLE savings account, not to exceed the total amount deducted under
subdivision (x) in the tax year and all previous tax years, if the withdrawal
was not a qualified withdrawal as provided in the Michigan achieving a better
life experience (ABLE) program act, 2015 PA 160, MCL 206.981 to 206.997. This
subdivision does not apply to withdrawals that are less than the sum of all
contributions made to an ABLE savings account in all previous tax years for
which no deduction was claimed under subdivision (x), less any contributions
for which no deduction was claimed under subdivision (x) that were withdrawn in
all previous tax years.
(z) For tax years that
begin after December 31, 2018, deduct, to the extent included in adjusted gross
income, compensation received in the tax year pursuant to the wrongful
imprisonment compensation act, 2016 PA 343, MCL 691.1751 to 691.1757.
(aa) For tax years that begin on and after January 1, 2022, deduct
all of the following:
(i) To the extent not deducted in
determining adjusted gross income, contributions made by the taxpayer in the
tax year less qualified withdrawals made in the tax year from a first-time home
buyer savings account, pursuant to the Michigan first-time home buyer savings
program act, not to exceed a total deduction of $5,000.00 for a single return
or $10,000.00 for a joint return per tax year. The amount calculated under this
subparagraph for a first-time home buyer savings account shall not be less than
zero. A deduction under this subsection shall not be claimed for more than 20
tax years.
(ii) To the extent not deducted in
determining adjusted gross income, interest earned in the tax year on the
contributions to the taxpayer's first-time home buyer savings account if the
contributions were deductible under subparagraph (i).
(iii) To the extent included in adjusted gross
income, distributions that are qualified withdrawals from a first-time home
buyer savings account to the qualified beneficiary of that savings account.
(bb) For tax years that begin on and after January 1, 2022, add,
to the extent not included in adjusted gross income, the amount of money
withdrawn by the taxpayer in the tax year from a first-time home buyer savings
account, not to exceed the total amount deducted under subdivision (aa) in the
tax year and all previous tax years, if the withdrawal was not a qualified
withdrawal as provided in the Michigan first-time home buyer savings program
act. This subdivision does not apply to withdrawals that are less than the sum
of all contributions made to a first-time home buyer savings account in all
previous tax years for which no deduction was claimed under subdivision (aa),
less any contributions for which no deduction was claimed under subdivision
(aa) that were withdrawn in all previous tax years.
(2) Except as otherwise
provided in subsection (7) and section 30a, a personal exemption of $3,700.00
multiplied by the number of personal and dependency exemptions shall be
subtracted in the calculation that determines taxable income. The number of
personal and dependency exemptions allowed shall be determined as follows:
(a) Each taxpayer may
claim 1 personal exemption. However, if a joint return is not made by the
taxpayer and his or her spouse, the taxpayer may claim a personal exemption for
the spouse if the spouse, for the calendar year in which the taxable year of
the taxpayer begins, does not have any gross income and is not the dependent of
another taxpayer.
(b) A taxpayer may claim
a dependency exemption for each individual who is a dependent of the taxpayer
for the tax year.
(c) For tax years
beginning on and after January 1, 2019, a taxpayer may claim an additional
exemption under this subsection in the tax year for which the taxpayer has a
certificate of stillbirth from the department of health and human services as
provided under section 2834 of the public health code, 1978 PA 368, MCL
333.2834.
(3) Except as otherwise
provided in subsection (7), a single additional exemption determined as follows
shall be subtracted in the calculation that determines taxable income in each
of the following circumstances:
(a) $1,800.00 for each
taxpayer and every dependent of the taxpayer who is a deaf person as defined in
section 2 of the deaf persons' interpreters act, 1982 PA 204, MCL 393.502; a
paraplegic, a quadriplegic, or a hemiplegic; a person who is blind as defined
in section 504; or a person who is totally and permanently disabled as defined
in section 522. When a dependent of a taxpayer files an annual return under
this part, the taxpayer or dependent of the taxpayer, but not both, may claim
the additional exemption allowed under this subdivision.
(b) For tax years
beginning after 2007, $250.00 for each taxpayer and every dependent of the
taxpayer who is a qualified disabled veteran. When a dependent of a taxpayer
files an annual return under this part, the taxpayer or dependent of the
taxpayer, but not both, may claim the additional exemption allowed under this
subdivision. As used in this subdivision:
(i) "Qualified disabled veteran" means a veteran with
a service-connected disability.
(ii) "Service-connected disability" means a disability
incurred or aggravated in the line of duty in the active military, naval, or
air service as described in 38 USC 101(16).
(iii) "Veteran" means a person who served in the active
military, naval, marine, coast guard, or air service and who was discharged or
released from his or her service with an honorable or general discharge.
(4) An individual with
respect to whom a deduction under subsection (2) is allowable to another
taxpayer during the tax year is not entitled to an exemption for purposes of
subsection (2), but may subtract $1,500.00 in the calculation that determines
taxable income for a tax year.
(5) A nonresident or a
part-year resident is allowed that proportion of an exemption or deduction
allowed under subsection (2), (3), or (4) that the taxpayer's portion of adjusted
gross income from Michigan sources bears to the taxpayer's total adjusted gross
income.
(6) In calculating
taxable income, a taxpayer shall not subtract from adjusted gross income the
amount of prizes won by the taxpayer under the McCauley-Traxler-Law-Bowman-McNeely
lottery act, 1972 PA 239, MCL 432.1 to 432.47.
(7) For each tax year
beginning on and after January 1, 2013, the personal exemption allowed under
subsection (2) shall be adjusted by multiplying the exemption for the tax year
beginning in 2012 by a fraction, the numerator of which is the United States
Consumer Price Index for the state fiscal year ending in the tax year prior to
the tax year for which the adjustment is being made and the denominator of
which is the United States Consumer Price Index for the 2010-2011 state fiscal
year. For the 2022 tax year and each tax year after 2022, the adjusted amount
determined under this subsection shall be increased by an additional $600.00.
The resultant product shall be rounded to the nearest $100.00 increment. For
each tax year, the exemptions allowed under subsection (3) shall be adjusted by
multiplying the exemption amount under subsection (3) for the tax year by a
fraction, the numerator of which is the United States Consumer Price Index for
the state fiscal year ending the tax year prior to the tax year for which the
adjustment is being made and the denominator of which is the United States
Consumer Price Index for the 1998-1999 state fiscal year. The resultant product
shall be rounded to the nearest $100.00 increment.
(8) As used in this
section, "retirement or pension benefits" means distributions from
all of the following:
(a) Except as provided
in subdivision (d), qualified pension trusts and annuity plans that qualify
under section 401(a) of the internal revenue code, including all of the
following:
(i) Plans for self-employed persons, commonly known as Keogh or
HR10 plans.
(ii) Individual retirement accounts that qualify under section
408 of the internal revenue code if the distributions are not made until the
participant has reached 59-1/2 years of age, except in the case of death,
disability, or distributions described by section 72(t)(2)(A)(iv) of the internal revenue code.
(iii) Employee annuities or tax-sheltered annuities purchased under
section 403(b) of the internal revenue code by organizations exempt under
section 501(c)(3) of the internal revenue code, or by public school systems.
(iv) Distributions from a 401(k) plan attributable to employee
contributions mandated by the plan or attributable to employer contributions.
(b) The following
retirement and pension plans not qualified under the internal revenue code:
(i) Plans of the United States, state governments other than
this state, and political subdivisions, agencies, or instrumentalities of this
state.
(ii) Plans maintained by a church or a convention or association
of churches.
(iii) All other unqualified pension plans that prescribe
eligibility for retirement and predetermine contributions and benefits if the
distributions are made from a pension trust.
(c) Retirement or
pension benefits received by a surviving spouse if those benefits qualified for
a deduction prior to the decedent's death. Benefits received by a surviving
child are not deductible.
(d) Retirement and
pension benefits do not include:
(i) Amounts received from a plan that allows the employee to
set the amount of compensation to be deferred and does not prescribe retirement
age or years of service. These plans include, but are not limited to, all of
the following:
(A) Deferred
compensation plans under section 457 of the internal revenue code.
(B) Distributions from
plans under section 401(k) of the internal revenue code other than plans
described in subdivision (a)(iv).
(C) Distributions from
plans under section 403(b) of the internal revenue code other than plans
described in subdivision (a)(iii).
(ii) Premature distributions paid on separation, withdrawal, or
discontinuance of a plan prior to the earliest date the recipient could have
retired under the provisions of the plan.
(iii) Payments received as an incentive to retire early unless
the distributions are from a pension trust.
(9) In determining
taxable income under this section, the following limitations and restrictions
apply:
(a) For a person born before
1946, this subsection provides no additional restrictions or limitations under
subsection (1)(f).
(b) Except as otherwise
provided in subdivision (c), for a person born in 1946 through 1952, the sum of
the deductions under subsection (1)(f)(i), (ii), and (iv) is limited to
$20,000.00 for a single return and $40,000.00 for a joint return. After that
person reaches the age of 67, the deductions under subsection (1)(f)(i), (ii), and (iv) do not apply and that person is eligible for a deduction of
$20,000.00 for a single return and $40,000.00 for a joint return, which
deduction is available against all types of income and is not restricted to
income from retirement or pension benefits. A person who takes the deduction
under subsection (1)(e) is not eligible for the unrestricted deduction of
$20,000.00 for a single return and $40,000.00 for a joint return under this
subdivision.
(c) Beginning January 1,
2013 for a person born in 1946 through 1952 and beginning January 1, 2018 for a
person born after 1945 who has retired as of January 1, 2013, if that person
receives retirement or pension benefits from employment with a governmental
agency that was not covered by the federal social security act, chapter 531, 49
Stat 620, the sum of the deductions under subsection (1)(f)(i), (ii), and (iv) is limited to $35,000.00 for a single return and, except as
otherwise provided under this subdivision, $55,000.00 for a joint return. If
both spouses filing a joint return receive retirement or pension benefits from
employment with a governmental agency that was not covered by the federal
social security act, chapter 531, 49 Stat 620, the sum of the deductions under
subsection (1)(f)(i), (ii), and (iv) is limited to
$70,000.00 for a joint return. After that person reaches the age of 67, the
deductions under subsection (1)(f)(i), (ii), and (iv) do not apply and that
person is eligible for a deduction of $35,000.00 for a single return and
$55,000.00 for a joint return, or $70,000.00 for a joint return if applicable,
which deduction is available against all types of income and is not restricted
to income from retirement or pension benefits. A person who takes the deduction
under subsection (1)(e) is not eligible for the unrestricted deduction of
$35,000.00 for a single return and $55,000.00 for a joint return, or $70,000.00
for a joint return if applicable, under this subdivision.
(d) Except as otherwise
provided under subdivision (c) for a person who was retired as of January 1,
2013, for a person born after 1952 who has reached the age of 62 through 66
years of age and who receives retirement or pension benefits from employment
with a governmental agency that was not covered by the federal social security
act, chapter 531, 49 Stat 620, the sum of the deductions under subsection
(1)(f)(i), (ii), and (iv) is limited to $15,000.00 for a single return and, except as
otherwise provided under this subdivision, $15,000.00 for a joint return. If
both spouses filing a joint return receive retirement or pension benefits from
employment with a governmental agency that was not covered by the federal
social security act, chapter 531, 49 Stat 620, the sum of the deductions under
subsection (1)(f)(i), (ii), and (iv) is limited to
$30,000.00 for a joint return.
(e) Except as otherwise
provided under subdivision (c) or (d), for a person born after 1952, the
deduction under subsection (1)(f)(i), (ii), or (iv) does not apply. When
that person reaches the age of 67, that person is eligible for a deduction of
$20,000.00 for a single return and $40,000.00 for a joint return, which
deduction is available against all types of income and is not restricted to
income from retirement or pension benefits. If a person takes the deduction of
$20,000.00 for a single return and $40,000.00 for a joint return, that person
shall not take the deduction under subsection (1)(f)(iii) and shall not take the personal exemption under subsection
(2). That person may elect not to take the deduction of $20,000.00 for a single
return and $40,000.00 for a joint return and elect to take the deduction under
subsection (1)(f)(iii) and the personal
exemption under subsection (2) if that election would reduce that person's tax
liability. A person who takes the deduction under subsection (1)(e) is not
eligible for the unrestricted deduction of $20,000.00 for a single return and
$40,000.00 for a joint return under this subdivision.
(f) For a joint return,
the limitations and restrictions in this subsection shall be applied based on
the date of birth of the older spouse filing the joint return. If a deduction
under subsection (1)(f) was claimed on a joint return for a tax year in which a
spouse died and the surviving spouse has not remarried since the death of that
spouse, the surviving spouse is entitled to claim the deduction under subsection
(1)(f) in subsequent tax years subject to the same restrictions and
limitations, for a single return, that would have applied based on the date of
birth of the older of the 2 spouses. For tax years beginning after December 31,
2019, a surviving spouse born after 1945 who has reached the age of 67 and has
not remarried since the death of that spouse may elect to take the deduction
that is available against all types of income subject to the same limitations
and restrictions as provided under this subsection based on the surviving
spouse's date of birth instead of taking the deduction allowed under subsection
(1)(f), for a single return, based on the date of birth of the older spouse.
(10) As used in this
section:
(a) "Oil and
gas" means oil and gas subject to severance tax under 1929 PA 48, MCL
205.301 to 205.317.
(b) "Senior citizen" means that term as defined in
section 514.
(c) (b) "United
States Consumer Price Index" means the United States Consumer Price Index
for all urban consumers as defined and reported by the United States Department
of Labor, Bureau of Labor Statistics.
Enacting section
1. This amendatory act does not take effect unless Senate Bill No.____ or House
Bill No. 4289 (request no. 01756'21) of the 101st Legislature is enacted into
law.