HB 4747 — Individual income tax: deductions; deduction for contributions made to any 529 education savings plan; provide for. Amends sec. 30 of 1967 PA 281 (MCL 206.30).

HB-4747, As Passed House, October 21, 2025 SUBSTITUTE FOR HOUSE BILL NO.

KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 (b) Add taxes on or measured by income to the extent the taxes have been deducted in arriving at adjusted gross income including any direct or indirect allocated share of taxes paid by a flow- through entity under part 4.

(i) Retirement or pension benefits received from a federal public retirement system or from a public retirement system of or KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 created by this state or a political subdivision of this state.

KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 (h) Adjustments with respect to estate and trust income as provided in section 36.

(I) The purchaser has had the purchaser's offer to enter into an advance tuition payment contract rejected by the board of KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 directors of the Michigan education trust, if the board determines that the trust cannot accept an unlimited number of enrollees upon an actuarially sound basis.

(n) Deduct a net operating loss deduction for the taxable year as determined under section 172 of the internal revenue code KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 subject to the modifications under section 172(b)(2) of the internal revenue code and subject to the allocation and apportionment provisions of chapter 3 for the taxable year in which the loss was incurred.

(ii) The amount of a refund received in the tax year based on taxes paid under the city income tax act, 1964 PA 284, MCL 141.501 KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 to 141.787.

(ii) "Recovered asset" means any asset of any type and any interest earned on that asset, including, but not limited to, bank KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 deposits, insurance proceeds, or artwork owned by a Holocaust victim during the period from 1920 to 1945, withheld from that Holocaust victim from and after 1945, and not recovered, returned, or otherwise compensated to the Holocaust victim until after 1993.

(u) Add, to the extent not included in adjusted gross income, KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 the amount of money withdrawn by the taxpayer in the tax year from education savings accounts, not to exceed the total amount deducted under subdivision (t) in the tax year and all previous tax years, if the withdrawal was not a qualified withdrawal as provided in the Michigan education savings program act, 2000 PA 161, MCL 390.1471 to 390.1486, or was subject to a penalty or an excise tax under any qualified tuition program established and maintained by another state or agency or an instrumentality of that state or agency pursuant to section 529 of the internal revenue code.

KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 (C) All rents and royalties derived from real property located within the agreement area.

KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 (i) Income from producing oil and gas to the extent included in adjusted gross income.

(y) Add, to the extent not included in adjusted gross income, the amount of money withdrawn by the taxpayer in the tax year from KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 an ABLE savings account, not to exceed the total amount deducted under subdivision (x) in the tax year and all previous tax years, if the withdrawal was not a qualified withdrawal as provided in the Michigan achieving a better life experience (ABLE) program act, 2015 PA 160, MCL 206.981 to 206.997, or was subject to a penalty or an excise tax under any qualified ABLE program established and maintained by another state or agency or an instrumentality of that state or agency pursuant to section 529a of the internal revenue code.

(i) Has been determined by the United States Department of Veterans Affairs to be permanently and totally disabled as a result KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 of military service and entitled to veterans' benefits at the 100% rate.

KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 (ii) To the extent not deducted in determining adjusted gross income, interest earned in the tax year on the contributions to the taxpayer's first-time home buyer savings account.

For a nonresident, only qualified tips that are attributable KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 to services performed in this state may be deducted.

The number of KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 personal and dependency exemptions allowed shall be determined as follows:

(b) For tax years beginning after 2007, $250.00 for each KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 taxpayer and every dependent of the taxpayer who is a qualified disabled veteran.

(7) For each tax year beginning on and after January 1, 2013, KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 the personal exemption allowed under subsection (2) shall be adjusted by multiplying the exemption for the tax year beginning in 2012 by a fraction, the numerator of which is the United States Consumer Price Index for the state fiscal year ending in the tax year prior to the tax year for which the adjustment is being made and the denominator of which is the United States Consumer Price Index for the 2010-2011 state fiscal year.

(ii) Individual retirement accounts that qualify under section 408 of the internal revenue code if the distributions are not made until the participant has reached 59-1/2 years of age, except in KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 the case of death, disability, or distributions described by section 72(t)(2)(A)(iv) of the internal revenue code.

(A) Deferred compensation plans under section 457 of the KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 internal revenue code.

A person who takes the deduction under subsection (1)(e) is not eligible for the unrestricted deduction of $20,000.00 for a single return and $40,000.00 for a joint return under this KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 subdivision.

(d) Except as otherwise provided under subdivision (c) for a person who was retired as of January 1, 2013, for a person born after 1952 who has reached the age of 62 through 66 years of age and who receives retirement or pension benefits from employment KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 with a governmental agency that was not covered by the federal social security act, 42 USC 301 to 1397mm, the sum of the deductions under subsection (1)(f)(i), (ii), and (iv) is limited to $15,000.00 for a single return and, except as otherwise provided under this subdivision, $15,000.00 for a joint return.

For tax years that begin on and after January 1, 2026 and before January 1, 2029, if a person takes the deduction of KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 $20,000.00 for a single return or $40,000.00 for a joint return, that person shall not take the personal exemption under subsection (2).

KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 (a) For the 2023 tax year, a taxpayer who was born after 1945 and before 1959 may deduct an amount of retirement or pension benefits not to exceed 25% of the maximum amount of retirement or pension benefits that the taxpayer would be allowed to deduct for the tax year under subsection (1)(f)(iv) if the taxpayer's retirement or pension benefits were subject to the limitations of that subsection only.

(e) For a joint return, the limitations and restrictions in this subsection shall be applied based on the date of birth of the KAS H03463'25 (H-1)(H-1)_HB4747_APH_1 abcvd0xayecd 1 older spouse filing the joint return.

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