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HB 5781

Individual income tax: other; definition of internal revenue code under the MiABLE program; update. Amends sec. 2 of 2015 PA 160 (MCL 206.982).

2023-2024 Regular Session Introduced by Julie Brixie and 7 co-sponsors

Updates Michigan ABLE Act to align key definitions with the 2024 IRS Code baseline (IRC), matching eligibility and qualified expenses to federal rules; keeps current-year option.

assigned PA 194'24
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Bill Summary · HB 5781

Summary — HB 5781 (Public Act 194 of 2024)

Status: Enacted (Public Act 194 of 2024) — Approved by Governor Jan 16, 2025. Effective date: April 2, 2025.
Statute amended: 2015 PA 160, section 2 (MCL 206.982). Sponsor: Rep. Sharon MacDonell (primary); cosponsors listed.

Purpose

To update the cross‑reference to the federal Internal Revenue Code (IRC) used throughout the Michigan Achieving a Better Life Experience (ABLE) Program Act so state law aligns with more recent federal ABLE/IRC provisions.

Key provision

  • Amends the definition of “internal revenue code” in MCL 206.982(j).
    • Previous text: “United States internal revenue code of 1986 in effect on January 1, 2015, or, at the option of the taxpayer, in effect for the current year.”
    • Revised text: “United States internal revenue code of 1986 in effect on January 1, 2024, or, at the option of the taxpayer, in effect for the current year.”
  • All other definitions in section 2 that rely on the IRC (for example, “disability certification,” “eligible individual,” “member of the family,” and “qualified disability expenses” as defined in IRC §529A) remain tied to that updated IRC reference or to the taxpayer’s option to use the current year IRC.

Who is affected

  • Primary: Michigan ABLE program participants — account owners and designated beneficiaries — because state definitions that determine eligibility, qualified disability expenses, and tax treatment of distributions now reference a more recent federal code baseline.
  • Secondary: Department of Treasury (oversight/administration), program managers, contracting states using Michigan’s ABLE program.
  • Taxpayers retain an option to use definitions as they exist in the IRC for the current year.

Impact and intent

  • No direct fiscal impact on state or local government (House and Senate fiscal analyses).
  • Practical effect: statutory conformity with updated federal ABLE account regulations (IRC §529A changes made between 2015 and 2024). This reduces ambiguity and helps ensure Michigan’s ABLE program operates consistently with federal tax rules governing eligibility, qualified distributions, and penalties/excise taxes.
  • The bill does not change benefit levels, tax rates, or create new credits; it updates a statutory cross‑reference year.

Legislative timeline (selected)

  • Introduced: June 5, 2024 (House).
  • Passed House: Dec 5, 2024 (102–0). Passed Senate: Dec 19, 2024 (38–0).
  • Enrolled: Dec 23, 2024. Presented to Governor Jan 8, 2025; signed Jan 16, 2025. Filed with Secretary of State Jan 16, 2025. Effective April 2, 2025.

For readers needing the statutory text: the change is limited to MCL 206.982(j), replacing the 2015 reference date with January 1, 2024, while retaining the taxpayer option to use the current‑year IRC.

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

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