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Snyder OKs bills to keep intact, raise income tax exemption

LANSING, Mich. (AP) — Gov. Rick Snyder on Wednesday signed legislation to keep intact and raise Michigan’s personal income tax exemption, which will save an individual roughly $25 and a family of four more than $100 annually within a few years.

“Let’s give some dollars back to our citizens. They work hard for it,” the Republican governor said before enacting the bills in his Capitol office, where he was joined by Lt. Gov. Brian Calley and GOP lawmakers.

The legislation was spurred by concerns that the federal tax cuts enacted by Congress and President Donald Trump could eliminate the state’s personal exemption due to how the state code is linked to U.S. law.

The laws clarify that the exemption continues, but they also boost the exemption until it gets to $4,900 in the 2021 tax year — $600 higher than what it was scheduled to reach. That is a $25.50 tax cut per individual, $51 for a couple or $102 per family of four. In 2022 and after, there will be annual inflationary increases to the exemption.

Facing questions on whether citizens would rather see what eventually will be $176 million in yearly tax savings used for road and bridge repairs in the midst of a freeze-thaw cycle that is opening up holes in the roads, Snyder said an additional $1.2 billion in transportation spending — a “huge increase” — is being phased in under a 2015 road-funding deal. Lawmakers also are poised to finalize a supplemental budget bill to spend $175 million more on roads this fiscal year than planned.

Snyder said Michigan can afford to both cut taxes and improve the roads.

Critics have said the past road-funding agreement fell far short of what is needed to smooth deteriorating infrastructure and will squeeze a general fund that already is stagnant due to business and other personal tax reductions.

Because the state tax code is tied to the federal code, there was concern that the reduction of the federal personal exemption to zero also nixed the state exemption and would have led to a big tax hike if no action was taken.

As part of the tax cut deal, Snyder and legislators also agreed to wipe clear all outstanding driver “responsibility” fees — extra fees imposed for certain traffic infractions — later this year. The governor will sign those bills soon.

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