By Sen. Joe Hune
22nd Senate District
Recently, the Michigan Senate approved legislation that would encourage charitable giving by simplifying state income tax requirements for certain trusts and annuities.
Michigan residents should be encouraged to give back to their communities through charitable giving. Instead, the current process makes it more complex and costly. People shouldn’t have to jump through hoops just to make a donation.
Senate Bill 1104 would exempt Michigan charitable gift annuities, charitable remainder trusts and charitable lead trusts from the obligation to withhold Michigan Income Tax. Such trusts allow the donor to give money to a charitable organization but receive a small recurring payment back, usually monthly, from the receiving organization.
This commonsense reform would have no effect on the taxability of Michigan income. In fact, SB 1104 is expected to save the Michigan Department of Treasury more than $1 million in programming costs. Additionally, this measure will merely clarify how non-taxable charitable income is treated and make the process easier to understand.
SB 1104 also simplifies and streamlines withholding requirements for smaller taxpayers who are generally taxed as individuals despite being organized as partnerships or limited liability corporations.
This type of charitable annuity income is not taxable, meaning that eventually the money is refunded to donors when they file their tax return. If this proposal is signed into law, this type of income would be exempt from withholding – eliminating the headache of Michigan residents having to wait for a refund of money that should not have been taken from them to begin with.
The measure is currently being considered by my colleagues in the House of Representatives.
Sen. Joe Hune is chair of the Senate Agriculture Committee. He represents the 22nd state Senate District, which includes Livingston and Shiawassee counties, and the southern part of Ingham County. The Ingham County portion includes Bunkerhill, Leslie, Stockbridge and Vevay townships, and the cities of Leslie and Mason.