Lawmakers in the Michigan House voted Tuesday to give Michiganders back the tax break they were promised, moving to return about $700 million in annual revenues to taxpayers.

“Families across Michigan are struggling to afford basic necessities – groceries, gas, housing, and child care costs are stretching budgets thinner than ever,” state Rep. Kathy Schmaltz, R-Jackson, said in a statement. “People need relief, and they need it now. With the state collecting more tax revenue, it’s time to give money back to the hardworking families who earned it.”

Schmaltz’s House Bill 4170 restores an automatic tax reduction approved by lawmakers in 2015 that was triggered by revenues exceeding inflation in 2023, cutting the personal income tax rate from 4.25% to 4.05% as of Jan. 1, 2025.

Architects of the 2015 law including former Gov. Rick Snyder, former House Speaker Kevin Cotter, and former Senate Majority Leader Arlan Meekhof contend the 2023 tax reduction was intended to be permanent, but Gov. Gretchen Whitmer’s administration and Attorney General Dana Nessel declared the cut a temporary one-year reprieve and courts upheld their interpretation.

In addition to reverting the tax rate to 4.05%, Schmaltz’s bill would also clarify that future tax reductions triggered by the 2015 law would be permanent unless amended by the Legislature.

“Instead of hoarding surplus funds, the state should prioritize giving money back to the people who earned it,” Schmaltz said. “Michigan families shouldn’t have to choose between putting food on the table and paying their bills while the state sits on excess revenue. Government shouldn’t be taking more than it needs, especially when people are working harder than ever just to make ends meet. Our plan will put money back in families’ pockets where it belongs.”

HB 4170 cleared the House on a vote of 65-43 on Tuesday with seven Democrats in support: Reps. Kelly Breen of Novi, John Fitzgerald of Wyoming, Matt Koleszar of Plymouth, Denise Mentzer of Mount Clemens, Reggie Miller of Van Buren Township, Angela Witwer of Delta Township and Mai Xiong of Warren, The Detroit News reports.

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State Rep. Ann Bollin, R-Brighton Township, chair of the House Appropriations Committee, pointed to state budget forecasts with higher-than-expected revenues over the last two years as evidence the state can afford to give taxpayers a break.

In January, those excess collections were estimated at about $850 million, which Bollin said is more than enough to cover the tax reduction.

“Instead of looking for new ways to spend every penny that comes into the state coffers, I am focused on giving money back to the people who earned it,” Bollin said in a statement. “Government should not be padding its budget while families are struggling to make ends meet. This plan will provide meaningful relief and put money back where it belongs — in the pockets of Michigan taxpayers.”

State Rep. Ken Borton, R-Gaylord, contended Tuesday’s “bipartisan vote proves just how unpopular the 2024 Democrat income tax hike really was.”

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“Several of our House Democrat colleagues joined House Republicans in our efforts to reverse Gov. Whitmer’s income tax hike,” he noted in a statement. “I’m proud to vote to repeal this income tax hike and return tax dollars to the pockets of hardworking Michigan residents.”

Democrats who opposed HB 4170 complain the legislation will drain about $700 million a year from the state’s coffers with little benefit for the lowest earners. Rep. Jasper Martus, D-Flushing, told The News residents earning $27,000 per year would save $11 in taxes.

“The real people who will benefit from this are the multimillionaires,” Martus alleged.

State Rep. Morgan Foreman, D-Pittsfield Twp., described HB 4170 as a “wolf in sheep’s clothing” in comments to the Detroit Free Press.

“The wolf being the wealthy receiving yet another tax cut,” Foreman said.

HB 4170 now heads to the Senate, where its fate is unknown with a Democratic majority.

Spokespersons for Senate Majority Leader Winnie Brinks, D-Grand Rapids, and Whitmer did not respond to The News’ request for comment on the legislation.

Regardless, House Floor Leader Bryan Posthumus, R-Cannon Twp., said the proposed tax reversion is “an important step in the right direction” but urged lawmakers to go further, pointing to states with no income tax at all, the Free Press reported.

“Our state doesn’t need more revenue,” he said, “it needs less government.”