SB-0393, As Passed Senate, June 16, 2005

SUBSTITUTE FOR

SENATE BILL NO. 393

     A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.532) by adding section 272.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 272. (1) For tax years that begin after December 31,

2005, a qualified taxpayer may claim a credit against the tax

imposed by this act equal to 10% of the first $10,000.00 of

eligible expenses paid in the tax year for courses that will lead

to a postsecondary degree or that are taken to acquire or improve

the taxpayer's job skills at an eligible educational institution.

     (2) For the 2006 tax year and each tax year after the 2006 tax

year, the maximum amounts of adjusted gross income under subsection

(6)(e)(i) shall be adjusted by the percentage increase in the United

States consumer price index for the immediately preceding calendar

year.

     (3) Money from any other source used to pay for eligible

expenses shall not be used to calculate the credit under this

section.

     (4) Amounts deducted under any other section of this act or

the single business tax act, 1975 PA 228, MCL 208.1 to 208.145,

shall not be used to calculate the credit under this section.

     (5) If the amount of the credit allowed under this section

exceeds the tax liability of the qualified taxpayer for the tax

year, that portion of the credit that exceeds the tax liability

shall be refunded.

     (6) As used in this section:

     (a) "Eligible educational institution" means any college,

university, vocational school, or other postsecondary educational

institution that is eligible to participate in a student aid

program administered by the federal department of education.

     (b) "Eligible expenses" means expenses listed in subparagraphs

(i) and (ii) paid for courses the qualified taxpayer took during the

tax year and for which he or she received academic credit and does

not include expenses listed in subparagraph (iii), as follows:

     (i) Tuition.

     (ii) Related expenses such as student-activity fees and

expenses for course related books, supplies, and equipment if the

related expenses are a condition for enrollment or attendance at

the institution or in the course.

     (iii) Any expenses related to the following types of courses:

     (A) Courses taken to meet a continuing education requirement

for a license or certificate required for the taxpayer's job.

     (B) Sports, games, or hobbies.

     (c) "Eligible taxpayer" means that term as defined in section

35d of the single business tax act, 1975 PA 228, MCL 208.35d.

     (d) "Modified adjusted gross income" means modified adjusted

gross income for purposes of the lifetime learning credit under

section 25A of the internal revenue code.

     (e) "Qualified taxpayer" means an individual who meets all of

the following criteria:

     (i) Has modified adjusted gross income of less than $51,000.00

for a single return or less than $103,000.00 for a joint return.

     (ii) Is at least 24 years old.

     (iii) Is employed by an eligible taxpayer for 25 hours per week

or more.

     (iv) Is not a full-time student as that status is determined by

the eligible educational institution that the employee attends.

     (f) "United States consumer price index" means the United

States consumer price index for all urban consumers as defined and

reported by the United States department of labor, bureau of labor

statistics, and as certified by the state treasurer.