Michigan House Bill HB4055

Michigan 2025-2026 Regular Session

• Introduced: 2/4/25
• Refer: 2/4/25

Caption

House Bill 4055 of 2025

Summary

HB4055 would amend Michigan’s Income Tax Act to create a new state individual income tax credit tied to the federal child tax credit. Beginning with tax years starting on or after January 1, 2025, a taxpayer could claim a Michigan credit equal to 50% of the federal credit allowed under section 24 of the Internal Revenue Code for the same tax year. The bill also makes the credit refundable, meaning taxpayers whose credit exceeds their Michigan income tax liability would receive the excess as a refund. In practical terms, the bill would reduce state income tax liability for eligible families and provide direct cash assistance to households with children, especially those with lower tax liability. Because the credit is pegged to the federal child tax credit, the state benefit would generally track federal eligibility rules and amounts, while applying only to Michigan returns filed for the same tax year.

Impact

The bill would add a new section 275 to the Michigan Income Tax Act of 1967 and create a new refundable state income tax credit for taxpayers eligible for the federal child tax credit. It would affect individual taxpayers, especially families with qualifying children, and would reduce state revenue by offsetting income tax collections with refundable credits. The amendment would take effect for tax years beginning on or after January 1, 2025.

Sentiment

Based on the bill caption and the absence of recorded committee testimony or votes, the available context suggests the bill is framed as a family tax relief measure rather than a controversial policy change. The proposal appears generally favorable to taxpayers with children, with the main policy appeal being support for working families and refundable assistance. No formal vote history or transcript record is available here to indicate organized support or opposition.

Contention

The principal policy issue is the fiscal cost of making the credit refundable, since refunds can exceed a taxpayer’s liability and therefore reduce state revenues more than a nonrefundable credit would. Any debate would likely center on the size of the benefit, whether tying the credit to the federal child tax credit is the best way to target relief, and the budget impact on the state. Potentially affected parties include families with children, lower-income taxpayers who may benefit most from refundability, and the state treasury, which would absorb the revenue loss.