Michigan Treasury Announces 2025 State and Federal EITC Data

The Michigan Department of Treasury has released its 2025 Earned Income Tax Credit (EITC) figures. This update is significant for tax professionals, payroll departments, and financial planners who advise low and moderate-income working families.

The announcement highlights the current benefits available under both the state and federal EITC programs and provides insight as taxpayers and preparers begin early planning for the upcoming filing season.

What Happened: Michigan Releases 2025 EITC Figures

On October 13, 2025, the Michigan Treasury announced new data showing that:

• The average Michigan state EITC for the 2025 filing season is $890.

• About 665,000 Michigan households are expected to qualify for the state credit.

• When combined with the average federal EITC of $2,966, the total benefit for qualifying taxpayers is expected to reach $3,856 on average.

This update follows Michigan’s EITC expansion enacted under 2023 legislation that increased the state match to 30 percent of the federal credit.

The Treasury emphasized that this credit supports working families, particularly those earning less than $63,398 annually, which is the federal EITC income limit for families with three or more qualifying children in 2025.

Why It Matters: Key Implications for Tax Preparers and Business Advisors

1. Planning and Compliance

Tax professionals in Michigan should incorporate the updated credit amounts into 2025 withholding and planning models. For working families, accurate EITC projections can influence wage structuring, benefit coordination, and eligibility for related programs such as the Child Tax Credit (CTC) and state-dependent care credits.

2. Client Education

CPAs and enrolled agents can expect a rise in client questions about EITC eligibility, especially from part-time or seasonal workers. Many eligible taxpayers miss the credit each year because of lack of awareness or filing errors. This creates an opportunity for preparers to build client trust and expand advisory services.

3. Business Owner Considerations

Employers may use this data in employee financial wellness programs. Encouraging eligible staff to file returns and claim the credit can help reduce turnover, improve job satisfaction, and demonstrate community support, particularly in sectors such as retail, manufacturing, and hospitality.

How the Michigan EITC Works (State vs. Federal)

Credit Type	Administered By	Maximum Credit (2025 est.)	Eligibility
Federal EITC	IRS	Up to $7,830 (family with 3+ children)	Based on earned income, filing status, and dependents
Michigan EITC	Michigan Treasury	30% of the federal amount	Must qualify for the federal EITC and file a Michigan return

Both credits are refundable, meaning taxpayers can receive the benefit even if they owe no income tax. Taxpayers must file both federal and state returns to receive the full benefit.

Geographic Relevance: Michigan Tax Relief and Economic Impact

According to Treasury estimates, the expanded Michigan EITC will inject nearly $600 million into the state economy during the 2025 tax season. Metro areas with higher concentrations of qualifying workers, such as Detroit, Grand Rapids, and Flint, are expected to see the largest benefit.

This data also shows how Michigan’s credit compares nationally. The state’s 30 percent match rate now ranks among the top ten most generous state EITC programs in the country. It aligns Michigan with states such as California and New York that have expanded their credits to address inflation and workforce participation challenges.

What’s Next for Tax Professionals

• IRS Coordination: Additional federal EITC guidance and updated tables for 2026 are expected in late November.

• State Updates: The Michigan Treasury may release clarifying instructions for taxpayers filing electronically early next year.

• Advisory Opportunity: CPAs should begin client outreach campaigns in Q4 2025 to ensure early awareness before filing season opens in January 2026.

  
  

Bottom Line

The Michigan Department of Treasury’s October 2025 EITC update provides positive news for working families and a planning opportunity for tax professionals. By leveraging both state and federal credits, Michigan taxpayers could see thousands of dollars in refundable credits this season. For advisors and business owners, understanding these figures today helps ensure accurate withholding, proactive compliance, and stronger community engagement tomorrow.

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