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HB 6018

Individual income tax: credit; credit for sales and use tax paid for textbooks purchased by eligible students; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 280.

2023-2024 Regular Session Introduced by Noah Arbit and 7 co-sponsors

Provides a refundable Michigan tax credit equal to sales/use tax paid on textbooks for Pell-eligible students and dependents.

bill electronically reproduced 09/26/2024
#highereducation:students #individualincometax:credit
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Bill Summary · HB 6018

Summary of Michigan House Bill 6018 (HB 6018)

Overview

HB 6018 would create a refundable income tax credit for Michigan taxpayers who pay sales or use tax on textbooks purchased for eligible students. The credit would apply to tax years beginning on or after January 1, 2024 and would be claimed on the individual income tax return in a form prescribed by the Department of Treasury. The bill adds a new Sec. 280 to the Michigan Income Tax Act (1967 PA 281).

Key Provisions

  • Credit purpose and amount

    • Taxpayers may claim a credit equal to the amount of sales tax or use tax paid for textbooks purchased during the tax year.
    • If the credit exceeds the taxpayer’s tax liability for the year, the excess is refunded.

  • Eligible participants

    • The credit is available to an “eligible student” or to a dependent of the taxpayer who is an eligible student.
    • An “eligible student” includes:
    • An individual awarded a federal Pell Grant under Title IV of the Higher Education Act and enrolled in an eligible in-state institution, maintaining satisfactory academic progress.
    • A professional or graduate student who would have been eligible for, and awarded, a Pell Grant under the same criteria if they were an undergraduate student, based on financial need.
    • An “eligible institution” is an institution that participates in federal student aid programs (per US DOE) and is located in Michigan (colleges, universities, vocational schools, etc.).
    • An “institution of higher education” encompasses public or private degree- or certificate-granting colleges or universities, junior colleges, and community colleges in Michigan.

  • Tax mechanics

    • The credit is claimed in a form and manner prescribed by the Department of Treasury.
    • The department may require receipts and other proof to show eligibility and the amount paid for textbooks.

  • Definitions

    • “Sales tax or use tax” covers Michigan’s sales and use taxes.
    • “Textbook” includes any book or other written material required for a course at the eligible institution.

Who Is Affected

  • Eligible students and their dependents who attend Michigan eligible institutions and qualify for Pell Grants (including certain graduate/professional students with need).
  • Families and individuals incurring textbook costs who pay Michigan sales/use tax on those textbooks.

Administrative and Timeline Details

  • Administration: Department of Treasury handles claims, eligibility verification, and form requirements.
  • Documentation: Taxpayers may need to submit receipts and supporting materials proving eligibility and textbook purchases.
  • Refundability: Excess credit over tax liability is refundable.
  • Effective period: Applies to tax years beginning on/after January 1, 2024.
  • Legislative status:
    • Introduced September 26, 2024 by Rep. Mai Xiong.
    • Referred to the Committee on Tax Policy.
    • Subsequent actions shown include a January 22, 2025 referral to the Joint Committee on Government Administration and Elections.

Potential Impacts

  • Financial relief for Pell-eligible students and dependents paying Michigan sales tax on textbooks.
  • Increases in administrative work for the Treasury to verify eligibility and receipts.
  • Targeted approach to reducing higher education textbook costs for low- and moderate-income students.

Note: This summary reflects the bill text and statuses provided; exact fate and any amendments pending committee/action may alter provisions.

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

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