Bill
HB 4488
Provides a refundable $5,000 per qualified dependent (0–3 years) tax credit, up to $15,000 per taxpayer, for working Michigan families with earned income ≥ $10,000.
Status
- Introduced March 12, 2025; House and Senate passed in May 2025.
- Signed by the Governor on June 20, 2025 (the bill text notes “see remarks for effective date”).
- Adds section 272a to the Michigan Income Tax Act (1967 PA 281, MCL 206.1–206.847).
- Companion bill: SB 2191.
Purpose
- Establish a refundable state individual income tax credit — called the Working Parent Tax Credit — to provide monetary support to taxpayers with very young dependent children.
Key provisions
- Credit amount: $5,000 per qualified dependent for each tax year.
- Age and dependency requirement: The dependent must be 3 years of age or younger on the last day of the tax year and an exemption for that dependent must have been claimed under MCL section 30(2)(b) in the same tax year.
- Maximum per taxpayer: A taxpayer may claim the credit for no more than 3 qualified dependents in a single tax year (maximum potential credit of $15,000 per taxpayer per year).
- Refundability: If the credit exceeds the taxpayer’s Michigan income tax liability, the excess is refundable (i.e., paid to the taxpayer).
- Eligibility — “qualified taxpayer”: Must have earned income of at least $10,000 for the tax year.
- Definitions: “Earned income” and “qualifying child” are defined by reference to the Internal Revenue Code (IRC) sections 32 and 152, respectively. “Qualified dependent” is a dependent who is a qualifying child under IRC §152.
- Effective tax years: The credit applies to tax years beginning on or after January 1, 2025.
Who is affected
- Primary beneficiaries: Working Michigan taxpayers with earned income ≥ $10,000 who claim dependents age 0–3 (and claim the corresponding exemption). Because the credit is refundable, low- and moderate-income working parents with limited state tax liability may receive direct payments.
- State budget/treasury: Refundable credits reduce net revenue and would have an associated fiscal cost (not specified in the bill text).
Practical impact and considerations
- Targeted support for families with infants and toddlers; could substantially reduce or eliminate state income tax for eligible families and produce direct refunds.
- Fiscal impact depends on the number of eligible taxpayers and claiming behavior; the text does not include appropriation or offsetting revenue measures.
- Interaction with federal definitions means federal tax rules will influence eligibility (e.g., qualifying child tests).
For more detail, see the full bill language adding section 272a to the Income Tax Act.
Compiled from official sources — confirm details with the bill’s official record.
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