Sometime this month, nearly 6000 working people in Livingston County will start to see a boost in their annual income of $1,200 or more.
That comes after Gov. Gretchen Whitmer and the Democratically-controlled Michigan Legislature expanded a tax credit for people who work but don’t earn much money.
The federal Earned Income Tax Credit was created in 1975 to offset some of the costs of working such as transportation and childcare to create an incentive for people to keep working even in low-wage jobs.
For years Michigan’s EITC was just 6 percent of the federal tax credit, or an average of $117.
But thanks to legislative action, the Michigan tax credit this year will be 30 percent of the federal tax credit or $583 on average. The actual amount will vary based on family size, with the maximum Michigan tax credit being $2,229 for 2023 for those with three or more qualifying children. People must file a federal and state tax return to receive the money.
In Livingston County alone, this expanded credit will put $3.47 million into the local economy as workers use the tax credit to pay bills and buy gas, food, childcare, and other essentials at local businesses.
Lawmakers also made the increase in the tax credit retroactive to 2022. The Michigan Department of Treasury will automatically send checks for the increased tax credit to those working families who filed tax returns for 2022 and qualified for the tax credit.
Those checks will start going out on Feb. 13 and will continue through mid-March. They will average $618.
Workers do not have to amend their 2022 tax returns to receive the retroactive amount, but if they want to receive the credit for 2023, they will need to file state and federal tax returns.
Unfortunately, not everyone who is eligible ends up filing. About a quarter of those eligible in Michigan fail to claim the tax credit.
The Earned Income Tax Credit lifts people out of poverty. It reduces income inequality. It helps people pay the expenses they need to get to work and keep their jobs. It puts them on the path to self-sufficiency. It boosts the local economy.
The expanded Earned Income Tax Credit is a good deal for everyone.
If you know someone who is struggling, please encourage them to look into the Earned Income Tax Credit.
