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Sales Tax Allocation Reform Act

This bill modifies the distribution of sales tax revenue in Michigan, making several key changes to how tax collections are allocated. The bill adjusts the distribution of the 4% sales tax, requiring that for fiscal years starting September 30, 2026, an additional $755 million will be deposited into the state school aid fund annually and $95 million will be distributed to cities, villages, and townships on a per capita basis. It maintains existing provisions for allocating sales tax revenue, including 15% distribution to local governments, 60% to the state school aid fund, and specific allocations for transportation and aviation-related funds. The bill also makes technical changes to how aviation fuel tax collections are reconciled and distributed, extending certain provisions through September 30, 2025. Additionally, the bill specifies that these changes will only take effect if a series of related House Bills (4180-4184, 4186-4187, and 4230) are also enacted into law. The modifications aim to provide more stable funding for local governments and education while maintaining the existing framework of sales tax revenue distribution.1