Michigan Tax Cut Proposals Raise Questions About State Budget as Governor Candidates Push Income Tax Elimination

Gubernatorial candidate Perry Johnson promises to eliminate Michigan's state income tax, but experts say the plan would require significant spending cuts

Republican businessman Perry Johnson has launched his campaign for governor of Michigan with a bold proposal: eliminate the state's personal income tax entirely. His campaign claims this would save families an average of $4,747 per year, but fact-checkers and budget analysts say the savings are overstated and the plan creates major questions about how Michigan would fund essential services.

The Campaign Promise

Johnson's campaign released a report showing how eliminating Michigan's flat 4.25% income tax would reduce the tax burden on families across the state. The campaign points to Michigan's median family income of approximately $123,000 and calculates that a 4.25% reduction would translate to roughly $4,747 in annual savings per household.

"We must be bold enough to completely eliminate the state income tax. Not reduce it. Not phase it out over decades. Eliminate it," Johnson said in a recent campaign statement. "When we do, Michigan will become a magnet for opportunity."

Johnson, who previously ran for governor in 2022 and was disqualified from the ballot, is positioning himself as an outsider businessman who can bring efficiency to state government. He argues that eliminating the income tax would stop Michigan families from leaving for Florida, Texas and Tennessee.

The Math Does Not Add Up

The Detroit News reported that Johnson's claims about savings are significantly inflated. According to state Treasury data, families earning between $110,000 and $120,000 paid an effective Michigan income tax rate of just 3.01 percent in 2021, not the 4.25 percent Johnson cites.

A family with a gross income of $111,691 paid an average state tax of $3,406 that year, which is about 30 percent less than Johnson's claims. State budget expert Bob Schneider with the non-partisan Citizens Research Council of Michigan told the Detroit News that Treasury data provides a more accurate picture of what families would actually save.

Using the most recent US Census Bureau data, Michigan's median income for a four-person household is currently about $123,010. Families earning that amount in 2021 paid an effective tax rate of 3.11 percent, or about $3,826 in state taxes. Those families would save money if the income tax were eliminated, but not as much as Johnson suggests.

The Budget Gap

The bigger question is what would replace the revenue Johnson's plan would eliminate. Michigan's 2026 state spending plan totals $81 billion, up significantly from the $57 billion budget signed into law the year before Gretchen Whitmer took office.

Eliminating the income tax would still require the next governor to cut significant spending, not increase services. Johnson's campaign proposes several ways to balance the budget, including:

• Auditing state agencies to find waste and fraud
• Implementing zero-based budgeting
• Cutting discretionary spending by 2 percent
• Claiming that economic growth would offset tax revenue losses

"These are all speculative," said Simon Schuster, a Michigan Public reporter who wrote a fact check on the proposal. "How many fraud cases would an audit uncover? Would zero-based budgeting actually save money or just disrupt services?"

What Services Would Be Cut

Michigan's state budget funds essential services across West Michigan and throughout the state. Eliminating the income tax would require finding alternative revenue sources or cutting programs.

The state budget supports:

• Public schools and higher education institutions
• Medicaid and other health programs
• Transportation infrastructure through MDOT
• State police and emergency services
• Human services and social programs

West Michigan communities rely heavily on these programs. Grand Rapids, Kalamazoo, Muskegon, Holland, and Battle Creek all depend on state funding for schools, roads, and essential services.

Other Candidates Join the Race

Several other Republican candidates are also calling for tax cuts, though their proposals vary. Mike Cox, Aric Nesbitt and Ralph Rebandt have all called for axing the income tax, while others have proposed property tax cuts or elimination.

The Michigan Public fact check noted that candidates who propose eliminating the income tax face major questions about how they would operate state government after cutting one of its primary funding sources.

Whitmer's Budget Record

Governor Whitmer has defended her budget approach, noting that state spending has grown to meet the needs of Michigan families. She recently signed an executive directive to help businesses access tariff refunds and quintupled the Michigan Working Families Tax Credit, giving over 650,000 working families an average refund of more than $3,800.

Whitmer's administration ended state taxes on tips, overtime, and Social Security benefits as part of recent budget deals that apply to 2026 through 2028.

The 2026 Election

The 2026 Michigan gubernatorial election will be a key test of how voters feel about state taxes and government spending. Johnson's campaign is already spending millions on advertising, including a reported $10 million ad blitz.

Johnson has not yet accepted donations from anyone, his campaign says, and claims he will never be beholden to lobbyists or establishment insiders. He is funding his own campaign after spending more than $20 million on prior failed campaigns for governor and president.

What West Michigan Families Should Know

For West Michigan families, the debate about income tax elimination comes at a time when state funding affects local schools, roads, and essential services. The proposal would require finding new revenue sources or cutting programs that communities depend on.

The Michigan Public fact check concluded that Johnson's savings claims are overstated and that eliminating the income tax would still require the next governor to cut significant spending. The question remains what those cuts would look like and which programs would be affected.

As the 2026 campaign heats up, voters in Grand Rapids, Kalamazoo, Muskegon and across West Michigan will need to weigh the promises of tax cuts against the reality of what Michigan's state budget supports.

Sources:

• Michigan Public: Fact check on Perry Johnson's tax cut proposal
• Detroit Free Press: Opinion piece defending Johnson's tax plan
• Detroit News: Article analyzing the budget impact of tax cuts
• Michigan.gov: State budget and tax information