Michigan Children Can Keep Earnings as ‘Kiddie Tax’ Dies

LANSING, Mich. — Michigan’s month-old “kiddie tax” was repealed Friday, sparing as many as 80,000 children from having to give the government 4.6% of their after-school earnings.

“The small amount of money youngsters earn from paper routes or baby-sitting or cutting lawns and shoveling snow should not be taxed,” Gov. James J. Blanchard said as he signed the repeal.

The move erases a change that went virtually unnoticed during the cumbersome process of altering state tax law to mesh with federal tax code changes adopted in 1986. The tax had been approved last month.

The bill exempts people making less than $1,500 a year from state income taxes. The state will have to forfeit between $4 million and $5 million in revenue it would have collected from up to 80,000 people, most of them children, who fall into that income bracket.

News accounts of lemonade stand operators and baby-sitters owing taxes on even small earnings spurred legislators to move quickly to change the measure. A bill sponsored by Sen. Norman Shinkle was passed by the state Senate last week and was unanimously approved this week by the House.