GRAND RAPIDS (WZZM) - As Michiganders prepare their state income taxes, they may be in for a rude awakening. Changes to the state's tax code enacted by lawmakers last year will mean many taxpayers will get smaller refunds or pay more taxes.
One area impacting families with children is elimination of the $600 per child exemption. Sherri Vainavicz, program manager of the United Way's 211, said Tuesday, "If you have four or five children that could be a significant decrease in their refund."
Special exemptions for seniors are no longer allowed, nor are those for jobless benefits that are higher than 50% of gross adjusted income.
Other tax changes include a tax on retiree pensions and elimination of many credits, including those for: City income taxes, contributions to homeless shelter, food banks, and community foundations.
The Earned Income Tax Credit is reduced from 20% to 6%, and there are reductions in the homestead property tax credit.
"For families who are struggling, or seniors, the cuts or changes could be quite significant," says Vainavicz.
Governor Rick Snyder and lawmakers approved many business tax cuts last year in hopes of boosting Michigan's economy. Much of those business tax cuts were made up by increased taxes on individuals, according to a report from the Michigan League for Human Services.
Governor Snyder, an accountant, has said the changes to the tax system were to make them more "simple, fair and efficient."
More details on the tax changes are available here: http://1.usa.gov/tkSFus