Michigan Senate Bill SB0840

Michigan 2025-2026 Regular Session

• Introduced: 3/17/26
• Refer: 3/17/26

Caption

Individual income tax: credit; credit for certain qualified dependents; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 281.

Summary

Senate Bill 840 would amend Michigan’s Income Tax Act to create a new refundable individual income tax credit beginning with tax years starting on or after January 1, 2026. The credit would equal 50% of the state’s target foundation allowance for the applicable school year and would be available for each qualifying dependent child for whom the taxpayer claims an exemption. If the credit exceeds the taxpayer’s income tax liability, the excess would be refunded. To qualify, a dependent must be at least 5 years old but younger than 19 on the last day of the tax year, must not be enrolled in a public school for the school year ending during that tax year, and must show grade-level proficiency in reading and math. The bill allows proficiency to be demonstrated through state or private assessments, exams, or other testing methods, and the Department of Treasury could require reasonable proof of eligibility.

Impact

The bill would add a new section 281 to the Michigan Income Tax Act and create a new refundable tax credit tied to the state school aid foundation allowance. It would affect taxpayers with school-age dependents who are educated outside the public school system, including families using private schooling, homeschooling, or other nonpublic educational arrangements, so long as the dependent meets the age and proficiency requirements. Because the credit is refundable, it could reduce state revenue beyond a taxpayer’s income tax liability and function as a direct payment to eligible families.

Sentiment

Based on the bill text and available context, the measure appears to be framed as a tax benefit for families educating children outside public schools, with an emphasis on academic proficiency and school choice. No committee transcripts or recorded votes are available, so there is no documented legislative debate or formal vote history to indicate broader support or opposition. The overall tone of the proposal suggests a policy preference for rewarding nonpublic education outcomes rather than a neutral across-the-board tax change.

Contention

The main points of potential contention are the bill’s restriction of the credit to dependents not enrolled in public school and its requirement that children demonstrate reading and math proficiency. Supporters would likely view these conditions as promoting educational choice and accountability, while critics may argue that the credit discriminates against public school families, creates administrative burdens, or uses tax policy to subsidize private or home-based education. The refundable nature of the credit may also raise fiscal concerns because it could reduce state revenues even for taxpayers with little or no tax liability.