BIRMINGHAM, Mich. (WXYZ) — Michigan Gov. Gretchen Whitmer unveiled her $88.1 billion budget proposal for fiscal year 2027 on Wednesday, featuring continued tax exemptions on tips, overtime pay and Social Security benefits.
Watch Tiarra Braddock's video report:
The comprehensive budget includes $13.6 billion in the general fund and $21.4 billion for school aid. The proposal also invests in road infrastructure improvements and public safety enhancements.
A key component of Whitmer's budget focuses on putting money back into residents' pockets through tax relief. The proposal continues state tax exemptions on tips, mirroring federal tip credit policies where workers earning gratuities aren't taxed on up to $25,000.
FULL VIDEO: Governor Whitmer's budget recommendations presented to Michigan legislature
"Deductions on overtime and tips continue helping 5,000 Michiganders save on average of $500 a year," according to the state budget presentation.
Curt Catallo, co-owner of Union Joints restaurant group, which includes Lincoln Yard and Little Yard in Birmingham, praised the tax breaks for hospitality workers.
"So that's great for servers, bartenders, bar backs, busers, anybody in the hospitality industry who's earning money on gratuities, they're not taxed on that event," Catallo said.
The restaurant industry veteran emphasized how challenging the hospitality sector can be and how these tax breaks benefit front-of-house staff.
"It means the front of the house, come April, is going to see a benefit, and they've earned every penny of that," Catallo said.
Larry Miller, a barista at Little Yard who earns tips, highlighted the importance of gratuities for lower-wage workers.
"A lot of lower-paying jobs, the tip aspect of it is super important," Miller said.
Michigan House Speaker Matt Hall also supported the tax exemptions.
"We're returning money back to the taxpayers through no tax on tips, overtime, and social security. We're giving you more money to put into your pocket," Hall said.
WEB EXTRA: Michigan House Speaker Matt Hall talks about the budget deal
Catallo emphasized the positive impact on service industry workers.
"For us, anything that allows servers, bartenders to keep more money in their pocket is a good thing," Catallo said.
The state House and Senate will now review Whitmer's proposed budget before creating their own proposals. All parties must reach an agreement on a final budget before July 1.
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You can check out the Budget Book below and see more on the State of Michigan's website:
