The 2018 East Lansing income tax ballot proposal was approved by voters during the August 7, 2018 Special Election. The tax will help move the City of East Lansing forward with much-needed reinvestment in public safety and infrastructure, while also helping to address long-term legacy cost challenges for the future financial sustainability of the City. The tax will also help to prevent deep cuts to City services. The tax will expire after 12 years and revenue from the tax will be dedicated for specific purposes (see below).
INCOME TAX MEETINGS
There will be a series of income tax meetings in November 2018 to provide information and answer questions from employers and community members regarding the implementation of the income tax. Meeting dates are listed below. All of the meetings will take place at the East Lansing Hannah Community Center, 819 Abbot Road.
Tuesday, Nov. 13; 2-4 p.m. (a meeting for employers)
Tuesday, Nov. 20; 11 a.m.-1 p.m. (a meeting for residents/employees)
Wednesday, Nov. 28; 6-8 p.m. (a meeting for residents/employees)
FREQUENTLY ASKED QUESTIONS
When will the tax be implemented?
The income tax will be implemented on January 1, 2019.
When will tax returns need to be filed?
Individuals will not need to file a tax return until January 2020.
Who will pay the tax?
East Lansing residents (working in East Lansing or another community) and non-residents working in the East Lansing community will pay the tax. Community members can view the East Lansing Income Tax Boundary Map (GIS) to determine if they live or work in the area where the income tax will be administered. The map is searchable by address, parcel number and MSU building name.
How much is the tax?
East Lansing residents' taxable income will be taxed at 1% and non-residents' taxable income will be taxed at 0.5%. If an individual lives in East Lansing and works in another community with an income tax or works in East Lansing and lives in another community with an income tax, they would split the 1% tax with both communities. The tax would never be more than 1%. There will be $600 deductions for each personal and dependency exemption claimed.
What income is exempt from the tax?
Income exempt from the City income tax will include retirement income, unemployment income, military pay and tax refunds (city, state and federal). Additionally, per a City ordinance, individuals who make less than $5,000 annually and do not have a personal exemption because they are claimed on someone else’s taxes would be exempt from the income tax. This would apply to students who are still claimed on their parent or guardian's taxes, for example. There will also be $600 deductions for all
Will there be a property tax reduction?
Yes. With the approval and implementation of the income tax, the City Charter amendment approved by voters in November 2017 will go into effect, reducing property taxes by 5 mills. Property owners will see the property tax reduction on their July 2019 tax bills.
How much revenue will be generated from the tax and how will that revenue be used?
According to Plante Moran’s Income Tax Study, the East Lansing income tax is estimated to generate approximately $10 million annually, but with approximately $5 million less in property taxes collected, the net revenue is expected to be approximately $5 million. These funds will be used for the purposes outlined in the ballot proposal: 20% to police and fire protection, 20% to infrastructure (maintenance and improvement of streets and sidewalks; water and sewer systems; and parks, recreation and City-owned facilities) and 60% to supplemental payments for unfunded pension liabilities for retired City employees. The income tax will expire after 12 years, unless reauthorized by voters. Both the time limit and purposes for which the net revenue will be used will be written into the City Charter, which cannot be changed without another vote of the people.
Now that the ballot proposal has been approved, what happens next?
Similar to other communities with an income tax, City of East Lansing staff is currently looking at outside agencies with expertise in administering income taxes. Residents can expect regular communication on the income tax and how the revenue from the tax is being used via the Dialog and e-Dialog newsletters. Community members can sign up for the e-Dialog at www.cityofeastlansing.com/eNews.
The East Lansing Finance Department is working to generate all income tax-related forms and guides, which will be posted on this website soon. Employers can email East Lansing Finance Director Jill Feldpausch, email@example.com, to request that the forms/guides be sent via email once they are ready. Please include the company name, your name, email address, phone number and info/materials requested in your email. The 3 digit code is ELA and the 5 digit code is MI-ELA. The City plans to use the common form for withholding the tax with the EFW-2 specifications or the CSV format for the electronic W-2s.