State Rep. Sharon Tyler: Just the factsPublished 10:40pm Wednesday, April 20, 2011
With so much misinformation being bounced around, it’s hard to decipher the real pitches from hyperbole when it comes to tax proposals and budget plans in Michigan.
First, whatever your age, if this proposed plan is approved, Social Security and/or military pensions would not be taxed. Also, any income that is taxed, would be taxed at a rate of 4.35 percent until Jan. 1, 2013 when that rate drops to 4.25 percent.
If you are age 67 and older as of Dec. 31, 2012, under the new proposal, if your pension is not taxed by the state right now, it would not be taxed under this plan. What this means is that if you are in this age group and have a public pension, it will not be taxed. If you have a private pension under the current exemption threshold of $45,120 for single filers and $90,240 for joint filers, you will not be taxed. You are also allowed a personal exemption of $3,700 per person.
If you are between the ages of 60 to 66 years of age as of Dec. 31, 2012, in addition to your Social Security income being exempt, up to $20,000 of retirement income from any public pension, private pension, 401(K) or IRA would not be taxed. (For joint filers, this amount is $40,000). You would also be allowed a personal exemption of $3,700 per person. As a member of this group, once you turn 67, you would receive a $20,000 single/$40,000 joint special senior exemption against all income in addition to your Social Security and personal exemptions.
For those born after 1952, you would not qualify for any exemptions on your income until you turn 67, when you would qualify for $20,000 single/$40,000 joint senior income exemption. The other difference is that if your Social Security exemption plus your personal exemption is more than the senior income exemption, you could choose the better of the two options.
Still with me? For those of you concerned about possible changes to the Homestead Property Tax Credit, here are the proposed details:
First off, people with household incomes up to $20,000 would receive a boost as their Homestead Property Tax Credit would go from 60 percent to 100 percent.
In addition, low-income seniors whose household incomes are $20,000 or below, and people with disabilities would maintain their 100 percent Homestead Property Tax Credit.
Households with incomes between $20,001 – $30,000 would see their Homestead Property Tax Credit decrease from 100 percent to 60 percent. Households with income from $30,001 to $40,999 would be eligible for a 60 percent Homestead Property Tax Credit, and there would be a phase-out for households with income from $41,000 to $50,000.
The maximum credit for anyone is $1,200, and households with income over $50,000 would not be eligible for the credit.
In addition, the plan includes removing the Michigan Business Tax and taxing all c-corporations at a flat rate of 6 percent. Smaller LLCs would pay on their personal income tax.
So there you have it. One of the most essential rights we hold as taxpayers is to know where our hard-earned money is going and why. I hope these details give you a better idea what has been proposed. Please let me know what you think about these tax reforms. I am still reviewing the changes myself, so your feedback is important as the time to decide on these proposals draws near.
I look forward to hearing your comments on these important issues. Please feel free to contact me by calling 1-888-373-0078 or email@example.com