Whitmer Proposes $88.1B Michigan Budget with Tax Cuts and Hikes

Governor's final budget plan includes property tax relief for seniors, sales tax holiday, and new taxes on tobacco, vaping, online gaming, and digital advertising.

Published on Feb. 11, 2026

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Michigan Governor Gretchen Whitmer has unveiled her $88.1 billion state budget proposal for fiscal year 2027, which includes both tax cuts and tax increases. The budget plan provides property tax rebates for seniors, a sales tax holiday on back-to-school items, but also proposes higher taxes on tobacco, vaping products, online gaming, and digital advertising. The budget also calls for withdrawing $400 million from the state's Rainy Day Fund to help address changes in federal funding and rising healthcare costs.

Why it matters

Whitmer's final budget as governor aims to balance tax relief for families and seniors with new revenue sources to fund state priorities like education, infrastructure, and economic development. The proposal faces pushback from Republican lawmakers who oppose any tax increases, setting up budget negotiations in the coming months.

The details

The budget includes a $90 million plan to provide property tax rebates of up to 10% for seniors aged 65 and older, as well as a $15 million sales tax holiday on back-to-school supplies. However, it also proposes $232 million in new tobacco taxes, a 57% tax on vaping products, $195.4 million in higher taxes on online gaming and sports betting, and a 4.7% digital advertising tax. Other fee increases are proposed for hunting, fishing, landfill use, and more. To help cover expenses, the budget calls for withdrawing $400 million from the state's Budget Stabilization (Rainy Day) Fund.

  • The budget proposal was presented to lawmakers on February 11, 2026.

The players

Gretchen Whitmer

The Governor of Michigan who proposed the $88.1 billion state budget for fiscal year 2027.

Jen Flood

The Michigan State Budget Director who presented the budget details to lawmakers.

Matt Hall

The Republican Speaker of the Michigan House of Representatives who opposes any tax increases in the budget.

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What they’re saying

“There will be no tax increases in this budget. We're going to have to live within our means, and we've got to make more cuts.”

— Matt Hall, Michigan House Speaker (freep.com)

“Michigan is open for business and on the move, and this budget will deliver on the kitchen-table issues that make a real difference in people's lives.”

— Gretchen Whitmer (freep.com)

What’s next

The Michigan Legislature will now review and negotiate Whitmer's budget proposal in the coming months before approving a final state spending plan.

The takeaway

Governor Whitmer's final budget plan aims to balance tax relief for families and seniors with new revenue sources, setting up budget negotiations with the Republican-controlled Legislature who oppose any tax increases.