The Michigan Department of Treasury released the following statement regarding today’s opinion by the Michigan Court of Appeals in Associated Builders and Contractors of Michigan v. Eubanks:
“The Michigan Department of Treasury is committed to serving taxpayers with integrity when administering state tax laws. Today’s unanimous opinion by the Michigan Court of Appeals has reaffirmed the individual income tax rate change was temporary. We will administer the law as the Courts have ruled and continue to ensure all Michiganders are provided fair and equitable treatment.”
Taxpayers are encouraged to review “Notice: Court of Appeals Concludes Reduction to Income Tax Rate for Tax Year 2023 Was Temporary.” This notice outlines that the 4.25% tax rate will apply to tax years that begin in 2024 for individuals, fiduciaries and flow-through entities.
Case Background
In 2015, Michigan enacted a law requiring a temporary reduction of the state individual income tax rate if the general fund grew faster than the rate of inflation in any year starting for the 2023 tax year. Because the general fund grew faster than inflation during the state’s 2022 fiscal year, the state individual income tax rate decreased to 4.05% for the 2023 tax year.
Last year, Attorney General Dana Nessel issued a legal opinion finding that the tax reduction will apply to the 2023 tax year only. The Michigan Court of Claims reaffirmed the finding.
