HOUSE BILL NO. 6480

December 02, 2020, Introduced by Rep. LaGrand and referred to the Committee on Tax Policy.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.713) by adding sections 277 and 677.

the people of the state of michigan enact:

Sec. 277. (1) For tax years beginning on and after January 1, 2019 and subject to the limitations under this section, a qualified taxpayer may claim a credit against the tax imposed by this part equal to the following percentages of the amount paid on a qualified student loan by the qualified taxpayer during the tax year:

(a) For a taxpayer who satisfies both eligibility conditions under subsection (6)(d)(i) and (ii), 50%.

(b) For a taxpayer who only satisfies 1 of the eligibility conditions under subsection (6)(d)(i) or (ii), 25%.

(2) A qualified taxpayer shall not claim a credit of more than 20% of the average yearly tuition to attend a similar postsecondary educational institution in this state under this section for any single tax year. A qualified taxpayer is only eligible to claim the credit allowed under this section within the 10 tax years immediately following his or her graduation from the postsecondary educational institution.

(3) To be eligible for the credit under this section, the qualified taxpayer shall provide the department with proof of residency and proof of employment in this state. The department may also require reasonable proof from the qualified taxpayer in support of payments claimed to be paid for a qualified student loan under this section.

(4) If the credit allowed under this section exceeds the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall be refunded.

(5) The credit allowed under this section shall be known as the "Michigan tuition reimbursement credit".

(6) As used in this section:

(a) "Postsecondary educational institution" means a degree or certificate granting college, university, community college, junior college, or trade, vocational, or occupational school.

(b) "Proof of residency" means a filed Michigan individual income tax return that includes the taxpayer's certification that he or she is a resident, a signed affidavit of Michigan residency, or other proof of residency acceptable to the department.

(c) "Qualified student loan" means any state or federal loans incurred to attend and receive a degree or certification from a postsecondary educational institution, including, but not limited to, state loans authorized under the higher education loan authority act, 1975 PA 222, MCL 390.1151 to 390.1165, and federal loans authorized under the higher education act of 1965, Public Law 89-329, 20 USC 1001 to 1161aa-1.

(d) "Qualified taxpayer" means a taxpayer who is a resident of this state, who is employed in this state, and who satisfies at least 1 of the following:

(i) Has graduated from a high school located in this state.

(ii) Has received a degree or certification from a postsecondary educational institution located in this state.

Sec. 677. (1) For tax years beginning on and after January 1, 2019 and subject to the limitations under this section, a taxpayer may claim a credit against the tax imposed by this part equal to the following percentages of the amount paid on a qualified student loan by the taxpayer on behalf of a qualified employee during the tax year:

(a) For a qualified employee who satisfies both eligibility conditions under subsection (6)(b)(i) and (ii), 50%.

(b) For a qualified employee who only satisfies 1 of the eligibility conditions under subsection (6)(b)(i) or (ii), 25%.

(2) A taxpayer shall not claim a credit of more than 20% of the average yearly tuition to attend a similar postsecondary educational institution in this state under this section for any single tax year for any single qualified employee.

(3) To be eligible for the credit under this section, the taxpayer in a form as prescribed by the department shall provide reasonable proof in support of payments claimed to be paid on behalf of a qualified employee for his or her qualified student loan under this section. The form shall include, at a minimum, all of the following:

(a) The taxpayer's federal employer identification number or the Michigan treasury number assigned.

(b) The name and address of the qualified employee.

(c) The date and amount of each payment made toward a qualified student loan.

(d) Any other criteria that the department considers appropriate for the determination of eligibility for the credit under this section.

(4) If the credit allowed under this section exceeds the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall be refunded.

(5) The credit allowed under this section shall be known as the "Michigan tuition reimbursement credit".

(6) As used in this section:

(a) "Postsecondary educational institution" means a degree or certificate granting college, university, community college, junior college, or trade, vocational, or occupational school.

(b) "Qualified employee" means an employee who is a resident of this state, who received a degree or certification from a postsecondary educational institution within the 10 immediately preceding tax years, and who satisfies at least 1 of the following:

(i) Has graduated from a high school located in this state.

(ii) Has received a degree or certification from a postsecondary educational institution located in this state.

(c) "Qualified student loan" means any state or federal loans incurred to attend and receive a degree or certification from a postsecondary educational institution, including, but not limited to, state loans authorized under the higher education loan authority act, 1975 PA 222, MCL 390.1151 to 390.1165, and federal loans authorized under the higher education act of 1965, Public Law 89-329, 20 USC 1001 to 1161aa-1.