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HB 6081

Individual income tax: deductions; deduction from taxable income for distributions from a baby bond trust account for eligible expenditures; provide for. Amends sec. 30 of 1967 PA 281 (MCL 206.30).

2023-2024 Regular Session Introduced by Jaime Churches and 3 co-sponsors

Michigan bill creates tax deduction for withdrawals from baby bond savings accounts used for approved expenses, potentially boosting wealth-building participation among lower-income families.

bill electronically reproduced 11/13/2024
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WeVote Research Nonpartisan
Bill Summary · HB 6081

Legislative bill overview

HB 6081 proposes to amend Michigan's income tax code to allow taxpayers to deduct distributions from "baby bond trust accounts" when those distributions are used for eligible expenditures. Baby bonds are government-seeded savings accounts typically designed to help lower-income families build wealth. The bill creates a tax incentive by reducing taxable income for qualifying distributions.

Why is this important

This proposal addresses wealth inequality by making baby bond programs more financially attractive to participants through tax relief. The tax deduction could increase participation rates and help families afford education, homeownership, or other major expenses by reducing their tax burden when accessing these savings accounts.

Potential points of contention

  • Revenue impact unclear: The bill doesn't specify which expenditures qualify or how many accounts exist, making it difficult to project the fiscal cost to Michigan's budget
  • Definition of "eligible expenditures" missing: The bill language provided doesn't detail what purchases qualify for the deduction, leaving implementation questions unresolved
  • Equity concerns: Tax deductions primarily benefit those with tax liability; lower-income families may see minimal benefit if they owe little or no income tax
  • Program details absent: The bill references baby bond trust accounts but doesn't establish whether such a program already exists in Michigan or if separate enabling legislation is required

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

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