News Story

State Income Tax Used For Giving Benefits To Low Income Residents

Checks go out for home heating credits, earned income credits, rent and property tax credits

Nearly one out of every six people who filed an income tax return in Michigan in 2015 ended up getting checks back that were mostly social welfare benefits paid to lower-income workers through the tax system, not tax refunds.

A key program for distributing the benefits is the Earned Income Tax Credit. A state Department of Treasury report indicates that of 4.7 million personal income tax returns filed in 2015, 756,900 claimed EITC benefits. The total amount paid to these households under this program was $109.5 million.

According to the IRS, the Earned Income Tax Credit, is "a benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund."

Another $45.4 million was paid through a low-income home heating credit program. Low-income households that claimed a Homestead Property Tax Credit also benefitted more from this program than eligible higher income households. The credit can also be claimed by renters.

The report found that people with an adjusted gross income of $16,000 or less accounted for 1.38 million personal income tax returns, or 29.2 percent of all those filed. As a group, they received $198 million more back than they paid.

In 2015 the state netted $8 billion in total income tax revenue. This was $589.7 million more than in 2014, a 7.9 percent increase according to the report.