Committee hears testimony on package to create state child tax credit, childcare savings accounts and tax exemptions for baby items

The House Committee on Economic Competitiveness heard testimony on a five‑bill package — House Bills 4055 through 4059 — that would create a 50% state child tax credit tied to the federal child tax credit, authorize a tax‑favored childcare savings account and exempt many baby and toddler items from Michigan sales and use tax.

Sponsor overview: Representative Schutte, one of the bill sponsors, told the committee the package aims to make it "easier to start a family, raise a family here" by returning tax dollars to families and helping Michigan address population stagnation. He said HB 4055 would establish a state child tax credit equal to 50% of the federal credit and that HB 4056–4057 would create the framework for a childcare savings program allowing up to $20,000 in joint, tax‑deductible contributions for qualified childcare expenses.

HB 4058 and HB 4059: Sales and use tax exemptions

Sponsors discussing HB 4058–4059 said the bills would eliminate Michigan sales and use tax on a broad list of infant and toddler items — from diapers and wipes to cribs, strollers and safety equipment — to reduce out‑of‑pocket costs for families. Representative Schmaltz (one of the sponsors present) said the exemptions would directly reduce everyday costs and described how early caregiving expenses accumulate.

Support and concerns

- Supporters: Genevieve Marnin, legislative director for Right to Life of Michigan, testified in favor of the entire package, saying reduced costs help mothers and families and could influence decisions about childbearing. Written support was submitted by business and civic groups read into the record, including the Grand Rapids Chamber, Detroit Regional Chamber, Small Business Association of Michigan, Michigan Manufacturers Association, Michigan Chamber, HighScope Educational Research Foundation, Michigan Catholic Conference, Michigan Council for Maternal and Child Health and Consumer Healthcare Products Association.

- Concerns about targeting the relief: Rachel Richards of the Michigan League for Public Policy, a nonpartisan research and advocacy group, supported the goal of helping children but cautioned HB 4055’s direct tie to the federal child tax credit could exclude the lowest‑income children. Richards said the federal child tax credit excludes some families with the lowest earnings from the full credit and recommended conversations about how to avoid leaving vulnerable children out of state relief.

Key technical details raised in committee

- Income phaseout: Sponsors said HB 4055 is tied to the federal child tax credit rules; committee discussion cited a joint‑filer phaseout reference of about $200,000 during questioning. Sponsors noted the state credit would follow the federal structure.

- Childcare savings account design: Sponsors described the childcare savings program as analogous to a health savings account or a 529 education account. Lawmakers asked whether the proposed account is income‑qualified; sponsors said it would not be income‑restricted but would include a cap on the amount eligible for preferential tax treatment.

- Use tax explanation: Witnesses described the Michigan use tax as the companion to the sales tax that applies to items purchased from out‑of‑state retailers that do not collect Michigan sales tax; HB 4059 would exempt the listed baby and toddler items from that use tax.

Public comment cards: Committee staff read in supporting and opposing organization cards. Supporters included multiple regional chambers and policy groups; opponents listed in the record included the Michigan Association of Superintendents and Administrators, Michigan Association of Secondary School Principals, Michigan Association of School Boards and the Michigan Alliance for Student Opportunity.

What happens next: Committee members asked technical questions about income thresholds, the administrative design of the childcare savings account and the scope of the sales/use tax exemptions. No vote was recorded during the hearing; sponsors said they would return for the committee vote.

Ending: Sponsors and supporters asked lawmakers to consider targeted relief for families as part of broader efforts to make Michigan more affordable and to grow the state’s population.