Individual income tax: credit; credit for sales and use tax paid for textbooks purchased by eligible students; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 281.
Summary
HB 4370 would amend Michigan’s Income Tax Act to create a new refundable income tax credit beginning with tax years starting on or after January 1, 2026. The credit would equal the amount of Michigan sales tax or use tax paid on textbooks purchased during the tax year by an eligible student, or on behalf of a dependent who is an eligible student. If the credit exceeds the taxpayer’s income tax liability, the excess would be refunded.
The bill defines an eligible student narrowly as a person who has received a federal Pell Grant, is enrolled in and attending an eligible institution in Michigan, and is maintaining satisfactory academic progress. It also covers certain graduate and professional students who would have qualified for a Pell Grant if they were undergraduates. The bill authorizes the Department of Treasury to require receipts and other proof of eligibility and payment, and it defines eligible institutions, textbooks, and the relevant sales and use taxes by reference to existing state law.
Impact
If enacted, HB 4370 would add a new section to the Michigan Income Tax Act and create a targeted refundable credit tied to textbook purchases for Pell Grant recipients attending qualifying Michigan schools. It would reduce state income tax revenue for eligible taxpayers and could generate refunds beyond tax liability, while also indirectly offsetting the sales and use tax burden on required course materials. The bill would affect students, parents claiming dependents, colleges and universities, vocational schools, and the Department of Treasury, which would administer and verify claims.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the measure appears to be framed as a student affordability and higher-education support proposal. Its design suggests a generally favorable policy intent toward low-income students, especially Pell Grant recipients, by reducing the cost of required textbooks. No formal opposition or recorded vote history is provided here, so there is no documented legislative sentiment beyond the bill’s apparent pro-student purpose.
Contention
The main policy questions raised by the bill are likely to be eligibility and fiscal impact. Because the credit is limited to students who have received a federal Pell Grant and are attending qualifying institutions in Michigan, some students with financial need but without Pell eligibility would not benefit. The refundable nature of the credit may also draw scrutiny from budget-focused lawmakers because it can produce direct state refunds even when a taxpayer owes little or no income tax. Administrative verification requirements, including proof of textbook purchases and student status, could also be a point of concern for both taxpayers and the Department of Treasury.
Corporate income tax: credits; employer credit for paid organ donation leave; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 279 & 679.