Lansing (WJRT) (1/9/18) You could be paying more state income tax this year. When Congress changed the tax laws they did away with personal exemptions. And that wiped out personal exemptions on the state level.
Exemptions help us to pay less in state taxes. But because Michigan's tax forms are tied in with the federal forms, it means as of right now, you don't have any personal exemptions.
"There won't be exemptions on the federal return because they have this really big standard deduction for everybody," said Lt. Gov. Brian Calley.
Michigan's tax code is going to have to change to keep up with the recent federal reforms. If it doesn't, many taxpayers will pay the state income tax at a higher rate. Because federal exemptions are carried over to state tax return forms, legislation is needed to clarify the state Income Tax Act so exemptions at the state level can continue.
"This exemption for the average family of four is worth about $680 a year. So this is not an insignificant difference. if we don't change it then that means that even though most families in Michigan will pay less taxes under the federal tax reform, they would have to give some of that to the state. We don't want that to happen," said Calley.
Without reform on a state level, Lansing will collect about $1.5 billion more this year from taxpayers. Calley and Governor Snyder are calling for the legislature to begin the reform process.
"We're hoping for very quick or swift action in the legislature on this," said Calley.