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Michigan Court of Appeals rules income tax cut temporary

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(The Center Square) – The Michigan Court of Appeals ruled that the 2023 income tax cut isn’t permanent.

Michiganders will pay an income tax rate of 4.25% in 2024, up from 4.05%. A law passed in 2015 for tax cuts is triggered when the state’s revenue outpaces inflation by a set amount.

The decision, unless appealed, means the government will receive $714 million to fund the proposed $81 billion 2025 budget. The court concluded that the statute was designed only to give temporary tax relief, despite a nonpartisan 2015 House Fiscal Agency’s bill analysis stating that the reductions would “continue indefinitely on an annual basis.”

The Mackinac Center for Public Policy sued the Department of Treasury on behalf of Associated Builders and Contractors of Michigan, National Federation of Independent Business, Inc., Sen. Ed McBroom, Rep. Dale Zorn, and six taxpayers statewide.

The Michigan Department of Treasury welcomed the ruling.

“The Michigan Department of Treasury is committed to serving taxpayers with integrity when administering state tax laws,” the agency said in a statement. “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.”

Mackinac might appeal to the state Supreme Court.

“The question in this case has always been what is the clearest reading of the statute,” Patrick Wright, vice president for legal affairs at the Mackinac Center said in a statement. “We remain convinced that the best reading of the law requires a permanent tax cut.”

If the court ruled the tax cut permanent, it could “upend” the 2025 proposed budget.

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