Broad Tax Proposal Clears Michigan Legislature
As a valued Lewis & Knopf, CPAs, P.C. client, you deserve to be informed first on important tax and accounting updates, and we want you to be aware of a recent tax legislation that has passed, Public Act 38 of 2011. The plan will cut overall business taxes and eliminate some tax credits. As your trusted advisor, we have provided highlights of the tax plan below.
About Public Act 38 of 2011 (Enacted House Bill 4361)
This law will cut overall business taxes by about $1 billion in the fiscal year starting Oct. 1 and $1.7 billion the following year. It replaces the Michigan Business Tax with a 6 percent corporate income tax, while eliminating many types of tax credits and exemptions. The Corporate income tax provisions will be effective beginning January 1, 2012 and will be levied only on businesses organized as a traditional corporation (a C-corporation) under federal tax rules unlike the Michigan Business Tax which is levied on all businesses.
It also ends several tax exemptions for seniors and retirees who have to pay more than $300 million in additional taxes. Those 67 and older as of Jan. 1, 2012, will continue to get the same tax breaks they have now, but taxes will apply to some retirement income for those ages 60 to 66, and younger workers will have to pay taxes on most of their retirement income. Income from Social Security and military pensions will remain exempt.
As a trusted advisor, Lewis & Knopf, CPAs, P.C. has taken a proactive approach to inform you about House Bill 4361, as it could have a significant effect on you, your organization and your employees. If you have any questions or concerns regarding the information highlighted above, please do not hesitate to contact our tax professionals at our Flint office at (810) 238-4617 or our Brighton office at (810) 225-1808. Until then, please accept our best wishes for continued success.