Budget shortfalls are impacting many states across the country, and some are finding ways to squeeze additional income by cutting longstanding tax incentives.
Michigan has announced it will eliminate an income tax credit that provides incentives for residents who donate to charities, according to the Flint Journal. The move is expected to yield a savings of roughly $35 million annually - but the change may reduce some taxpayers' refunds by between $100 and $200, the newspaper adds.
While many nonprofits are concerned the new rule will diminish charitable giving, previous research suggests donations are more the result of good will and generosity, rather than monetary incentives, the newspaper says.
The state said the change will go into effect on January 1, 2012. However, it will have no bearing on federal tax incentives for charitable donations.
Small tax credits can have a significant impact on a household's tax liability during filing season, and staying aware of the latest changes may help consumers work their finances around popular and beneficial tax incentives. Consumers can also educate themselves on the best ways to lower their burden by speaking with a tax preparer
well in advance of filing season.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.