Michigan Income Tax Credit Enacted For Qualified Home Improvements And Electric Utility

Public Act 287 of 2008 (2008 PA 287) is effective October 6, 2008 and applicable for tax years beginning after December 31, 2008 and before January 1, 2012. PA 287 enacts an income tax credit for a taxpayer with adjusted gross income (AGI) of $37,500 or less ($75,000 or less for spouses filing jointly) who purchases and installs a qualified home improvement for his or her principal residence during the tax year.

The credit is equal to 10% of the amount paid by the taxpayer in the tax year for the purchase and installation of each qualified home improvement or $75 ($150 for a husband and wife filing jointly), whichever is less for each qualified home improvement purchased and installed during the tax year.

To claim the credit, the taxpayer must provide verification of the amount paid along with documentation of its compliance with the Energy Star energy efficiency guidelines. “Qualified home improvement” includes the following items intended for residential and noncommercial use that meet or exceed the applicable Energy Star energy efficiency guidelines: insulation; furnaces; water heaters; windows; and refrigerators, clothes washers, and dishwashers. If the home improvement credit exceeds the taxpayer's tax liability for the tax year, the excess must be refunded.

Effective for tax years beginning after December 31, 2008 and before December 31, 2012, the bill also enacts an income tax credit for a taxpayer with AGI of $65,000 or less ($130,000 or less for spouses filing jointly) equal to specified percentages of the amount authorized for the customer's electric utility under Section 45(a)(a) of the Clean, Renewable, and Efficient Energy Act and paid during the tax year. The percentages of the amounts authorized are: 25% for tax years that begin after December 31, 2008 and before January 1, 2010; and 20% for tax years that begin after December 31, 2009 and before January 1, 2012. If the electric utility credit exceeds the taxpayer's tax liability for the tax year, the excess is not refunded.

Ed Kisscorni CPA