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HB 4430

Individual income tax: credit; credit for certain qualified dependents; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 281.

2025-2026 Regular Session

The bill creates a refundable Michigan income tax credit for each qualified dependent not in public school, equal to that school year’s target foundation allowance.

bill electronically reproduced 05/06/2025
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Bill Summary · HB 4430

Summary of HB 4430 (2025)

Overview

HB 4430 proposes adding Section 281 to the Michigan Income Tax Act (1967 PA 281) to create a refundable individual income tax credit for taxpayers with certain qualified dependents. The credit amount for each qualified dependent equals the target foundation allowance for the school year that ends during the tax year, as specified in the State School Aid Act. The bill sets criteria for who qualifies as a dependent and who can claim the credit, and it allows the Department to require supporting documentation.

Key Provisions

  • Credit scope and amount

    • Taxpayers may claim a credit against the state income tax for each qualified dependent.
    • The credit per dependent equals the target foundation allowance for the school year that ends during the tax year (as defined in the State School Aid Act, MCL 388.1620).
    • If the credit exceeds tax liability, the excess is refundable.

  • Eligible dependents (Qualified Dependents)

    • Must be at least 5 years old and younger than 19 on the last day of the tax year for which the credit is claimed.
    • Must not be enrolled in a public school for the school year that ends during the tax year.
    • Must demonstrate proficiency in reading and math appropriate to the dependent’s grade level, with proficiency measured via state or private assessments or other testing mechanisms.

  • Dependency linkage

    • The credit applies for each qualified dependent for whom an exemption was claimed under section 30(2)(b) for the same tax year.

  • Definitions and administrative notes

    • “Public school” is defined as in the Revised School Code.
    • The Department may require reasonable proof that the dependent is a qualified dependent.
    • The credit is a refundable credit, meaning any amount in excess of tax liability is paid back to the taxpayer.

who is affected

  • Individual income taxpayers who have one or more qualified dependents that meet the age, enrollment, and proficiency criteria.
  • Families with dependents not enrolled in public school and who demonstrate reading and math proficiency.
  • The Michigan Department of Treasury (administrative role) and school aid/education funding references within the State School Aid Act.

Legislative status and timeline

  • Filed: March 11, 2025
  • First reading: April 2, 2025
  • Referred to: Initially listed as Transportation in early actions; subsequently referred to Committee on Finance
  • Introduced: May 6, 2025 (by Rep. Brad Paquette)
  • Status: House electronically reproduced May 6, 2025

Notes

  • The credit amount is tied to the target foundation allowance established by the State School Aid Act for the school year ending during the tax year.
  • The bill adds a new Sec. 281 to the Income Tax Act, creating a potentially refundable, income tax offset for eligible families based on dependent-specific proficiency and non-enrollment in public schools.

Compiled from official sources — confirm details with the bill’s official record.

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