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Credit is important economic support for Michigan’s working families
LANSING — Small business and family groups today celebrated first passage of legislation to increase the state’s Working Families Tax Credit in the Michigan Senate because it helps low-income, working families keep more of their hard-earned money and pay for necessities they may struggle to afford.
The Working Families Tax Credit is also known as the Earned Income Tax Credit (EITC).
“Passage of the Working Families Tax Credit benefits hardworking people across Michigan, helping them support their families and creating greater economic opportunity,” said Hugh Madden, executive director of Prosperity Michigan. “It will have a direct impact by lifting working people out of poverty and giving them more income to spend on food, medication, utilities and other basic necessities that many people in our state are often forced to choose between.”
The Federal Earned Income Tax Credit (EITC) provides relief for low- to moderately low-income working families in the form of a credit on their tax returns. In 2006, lawmakers in Michigan passed a law that provided 20% of the federal EITC on state income taxes for those that qualify. That amount was reduced to 6% on state income taxes through legislation passed in 2010 under Gov. Rick Snyder. The vote today restores and increases the Michigan qualification for the Working Families Tax Credit to 30%.
“Restoring the credit is important to create an economy that works for everyone and meets the basic needs of people across Michigan,” said Hanna Schulze, president of People First Economy. “Families will have money to buy the goods and services they need while supporting local small businesses, like grocery and hardware stores, pharmacies, mechanics, and child-care facilities.”
Gov. Gretchen Whitmer has said that expanding the state’s EITC — now known as the Working Families Tax Credit — is part of her agenda in 2023, particularly because it helps children in the households that qualify. With inflation soaring, Whitmer has said that increasing the credit will offer real, immediate relief to working Michiganders and put their own money back in their pockets.
“Mamas and caregivers across Michigan will benefit from the expansion of this tax credit for hard-working Michiganders,” said Eboni Taylor, Michigan executive director of Mothering Justice. “The credit can help improve the quality of life for their children by having the money to buy more necessities. This could be the difference between a mother deciding between buying asthma medication for her child and paying the heating bill. Mothers shouldn’t have to struggle to pay for the necessities their children need.”
Eligibility requirements for the EITC in 2021 ranged from a single person making less than $21,430 to a couple making under $57,414 with three or more qualifying children.
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