Michigan state tax refunds will be higher for some families this year
(FOX 2) - The season for filing taxes is here and there's more than one reason for adults in Michigan to be looking forward to their refund.
The IRS factors in inflation rates when it calculates federal tax brackets, which means some filers can expect up to 10% more when they receive their checks from the agency. You can find more on that here.
The benefits don't stop there for those filing from Michigan, however. This year, an expanded Earned Income Tax Credit (EITC) means families that qualify will get a larger refund on their 2023 taxes - about $550 for the average family.
The ETIC was expanded in a few different ways to help Michigan families. According to the state, about 700,000 families are expected to benefit. Check out our explainer below to understand how:
What is the Earned Income Tax Credit?
The EITC is a tax benefit that's made available to qualifying working individuals and families who make under a certain income level.
There are two tax benefits available to those who qualify: one through the federal government and one through the state government. The Michigan EITC's expansion raises it from 6% to 30% of the federal EITC.
If you qualify for the federal benefit, you also qualify for the state benefit.
What counts as earned income?
According to the IRS website, earned income includes all taxable income and wages that someone receives for working for someone else, themselves, or a business or farm the individual owns.
It could be wages, salary, or tips where federal income taxes are withheld. It could also be income from a job where the employer doesn't withhold taxes. Many of those jobs fall under "gig economy" work like selling goods online and transporting riders for a driveshare business like Uber and Lyft.
It doesn't include interest and dividends, pensions, social security, and unemployment benefits.
Qualifying for tax credits
There are several factors that someone's EITC tax credit depends on, including income, filing status, whether someone is disabled, and the number of qualifying children a household has.
For example, if a married couple with two kids earned $59,478 in 2023, they would earn $6,604 from the federal EITC. The state tax benefit is determined by taking 30% of the federal benefit. In this case, it would come out to $2,229.
The maximum income and child limits for the federal EITC in 2023 and 2022 are below:
2023 Tax Year - The maximum income one can earn to qualify:
- For zero children, $17,640 for single filers, $24,210 for joint filers
- For one child, $46,560 for single filers, $53,120 for joint filers
- For two children, $52,918 for single filers, $59,478 for joint filers
- For three children, $56,838 for single filers, $63,398 for joint filers
For those under the income limit, the maximum credit amounts:
- No qualifying children: $600
- 1 qualifying child: $3,995
- 2 qualifying children: $6,604
- 3 or more qualifying children: $7,430
2022 Tax Year
- For zero children, $16,480 for single filers, $22,610 for joint filers
- For one child, $43,492 for single filers, $49,622 for joint filers
- For two children, $49,399 for single filers, $55,529 for joint filers
- For three children, $53,057 for single filers, $59,187 for joint filers
For those under the income limit, the maximum credit amounts:
- No qualifying children: $560
- 1 qualifying child: $3,733
- 2 qualifying children: $6,164
- 3 or more qualifying children: $6,935
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Tax benefits in 2022
The expanded Michigan EITC was signed in 2023 but will include the 2022 tax year as well. Eligible people and families that qualified for the state tax benefit in 2022 received the original 6% benefit.
Now in the 2024 tax year, those who qualified for the benefit will receive a supplemental check that makes up the difference between the original 6% benefit and the newly-expanded 30% rate.
Those supplemental checks will start being issued on Feb. 13, 2024 and will be mailed over a five-to-six week period. The checks will be sent to the most recent address that the treasury department has on file.
You do not have to file an amended 2022 tax return to receive the supplemental check.
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