LANSING, Mich. (AP) — First-time homebuyers would be allowed to save for their purchasing costs using a tax-exempt savings account under bills that passed in the Michigan Legislature, a move designed to keep residents in the state workforce.
The legislation, approved Thursday, would allow individuals to set aside money exempt from state income tax, as long as the maximum account balance does not exceed $50,000. Starting in 2022, single participants could receive up to a $5,000 deduction each year and $10,000 for joint filers.READ MORE: Chamber Of Commerce Asks To End Extra Unemployment Benefits
Each chamber of the Legislature passed identical bills with bipartisan support. They will not move to Gov. Gretchen Whitmer, though, until final legislative votes are taken.
Purchasing a first home is a major milestone, and a down payment and closing costs are a barrier for many, Sen. Ken Horn said in a statement.
“The aim of this program is to promote smart homeownership and the retention of talent in Michigan,” the Frankenmuth Republican said. “It’s a tool we can use to encourage people to ultimately put down roots here in our state.”
Michigan residents are getting older, and the state is losing valuable skilled workers as the population ages.
The measure has received support from the Michigan Realtors, Habitat for Humanity of Michigan, the Michigan Chamber of Commerce, and the Michigan Credit Union League. The state Department of Treasury opposes it, citing concerns over its effectiveness.READ MORE: AAA: Michigan's Average Gas Prices Rise To $2.95
The legislation would put the brunt of responsibility to oversee and record participation, eligibility, and compliance on the treasury department, Paul Connor, legislative liaison for the department, said earlier during a House committee hearing. He said the department expects low participation.
The bills would not provide for an exemption from federal income tax, Connor said. As a result, the savings would be small, totaling about $200 for single filers and $400 for joint filers.
Former Gov. Rick Snyder vetoed similar legislation in 2018.
Anna Liz Nichols is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.MORE NEWS: Advocates Call On Sen. Gary Peters To Schedule Hearing For Washington, D.C. Statehood Bill
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