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Bill Summary · SB 573

SB 573 — Summary (Income Tax Revenue Distribution; MCL 206.51 et al.)

Status: Placed on Immediate Passage (introduced Feb 20, 2025; enacted as Act 783 notification 4/18/2025 in legislative history)
Subject: Modification and consolidation of statutory provisions that govern distribution of revenue collected under the Income Tax Act of 1967 (MCL 206.51 et seq.).

Purpose / Intent

SB 573 consolidates and modernizes the statutory routing of revenue collected under Michigan’s Income Tax Act. The bill reorganizes and clarifies how income tax receipts are distributed to specific funds (notably the State School Aid Fund and several statutorily created special funds), removes obsolete or never-effective provisions, and codifies several standing distribution formulas and dollar amounts so the distributions are easier to administer and read in one place.

Key provisions

  • Amends MCL 206.51 (section 51 of the Income Tax Act of 1967).
  • Adds new sections 51a and 695a to the Act to consolidate distribution rules and related provisions.
  • Repeals sections that the Legislature identifies as obsolete or no longer effective: MCL 206.51d–206.51f, 206.51h, 206.476, and 206.695.
  • Preserves (and restates) a series of specific distribution rules that appear in current law, including:
    • A phased schedule of the percentage of gross individual income tax collections to be deposited to the State School Aid Fund (examples in the text show transitional percentage values for FY periods and a long-term deposit equal to 1.040% of gross collections divided by the statutory income tax rate beginning October 1, 2026).
    • A requirement that, beginning October 1, 2016, an amount equal to 3.5% of the 3‑year average of farmland tax credits (per MCL 324.36109) be deposited into the Agricultural Preservation Fund.
    • An annual deposit of $69,000,000 into the Renew Michigan Fund beginning with the 2018–2019 fiscal year (subject to a statutory limitation tied to minimum foundation allowance triggers).
  • Clarifies that some distribution provisions in prior statute only applied to specific past fiscal years and therefore are being repealed as obsolete.
  • The bill is largely organizational/administrative rather than altering core tax rates.

Who is affected

  • State financial administrators and revenue accounting (Department of Treasury, state budget offices): consolidates distribution instructions that they follow when allocating income tax receipts.
  • K–12 education finance (State School Aid Fund) and special funds identified in statute (Agricultural Preservation Fund, Renew Michigan Fund) — the bill restates and clarifies the bases and timing for deposits to those funds.
  • Taxpayers: no direct change to tax rates or new taxes; distribution mechanics are clarified only.

Fiscal and administrative impact

  • Nonpartisan fiscal analyses provided with the bill indicate no net impact on total State or local revenue or expenditures — the bill reorganizes and repeals duplicate/ineffective language but does not change the underlying revenue flows in substance.
  • Administrative benefit: consolidating distribution rules should simplify accounting and statutory interpretation. No material change to taxpayer liabilities is specified.

Procedural / Effective dates

  • The legislation amends and reorganizes specific sections of the Income Tax Act; repeal and consolidation take effect according to the bill’s enactment timetable (legislative history shows movement and eventual enactment actions in 2025).
  • Some distribution timelines cited in the text reference deposit dates tied to specific fiscal years (e.g., October 1, 2026 onward for the long‑run school aid percentage). Readers should consult the final enrolled act or official session laws for exact effective dates and operative provisions.

If you want, I can produce a one‑page comparison table showing the current statutory distribution language side-by-side with the consolidated language SB 573 adopts.

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

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