LANSING, Mich. (WZMQ) – Michigan’s House of Representatives returned to session Tuesday for the first time since passing the state’s $84 billion budget earlier this month — and lawmakers wasted no time taking up new tax legislation.
During their first day back, representatives approved three bipartisan bills with the goal of keeping more money in Michiganders’ pockets. Two of the bills would change how sales tax is applied to trade-ins for electronics like phones, tablets, and laptops.
Currently, customers pay sales tax on the full price of a new device, even if they trade in an old one for credit. Under the proposed change, the sales tax would apply only to the difference between the trade-in value and the new purchase price.
Representative Steve Frisbie (R–Battle Creek) says the current system amounts to double taxation.
“It essentially became a double taxation problem, and nobody should be taxed twice on the same item,” Frisbie said. “It deserves to be in the consumer’s pocket, not in the state coffers.”
He added that while the savings might seem small for an individual, families could notice the difference.
“A single person might save forty-two dollars a year, but a family with teenagers could save much more, and that money belongs in their pockets, not the government’s.”
Supporters of the proposal, including AT&T, T-Mobile, and other electronics insurers, say the change would make technology more affordable and encourage consumers to recycle old devices.
Opponents, including the Michigan Department of Treasury and several school associations, argue it could cost the state’s School Aid Fund between $7 million and $9 million each year.
The third bill, passed Tuesday, House Bill 4747, would allow taxpayers to claim state income tax deductions for contributions to college or disability savings accounts, even if those accounts are based outside of Michigan.
Currently, Michigan residents only get that deduction if they invest in the state’s own programs, such as the Michigan Education Savings Program or the MiABLE disability savings plan.
Representative Mark Tisdel (R–Rochester Hills), who sponsored the bill, said the change would give families more flexibility to choose the plan that best fits their needs.
“If you’re investing in an IRS-approved 529 account anywhere in the U.S., you should be able to deduct those contributions on your Michigan return,” Tisdel said. “We shouldn’t penalize people for finding a plan that works better for them.”
Treasury officials estimate the change could reduce state income tax revenue by up to $10 million per year, including about $2.3 million from the $20 billion School Aid Fund.
Tisdel said that while any revenue reduction matters, the goal is to promote long-term financial responsibility.
“The need to save aggressively for college or for medical expenses is real,” he said. “If giving families a small tax break helps them start saving, that’s a big deal.”
All three bills now move to the Michigan Senate for consideration.
