LANSING – Low-income residents in Michigan will see up to $880 in income tax benefits next year under legislation signed Friday by Gov. Jennifer Granholm. Federal exemptions will still apply to persons earning the minimum wage. Under another bill the governor signed, teens will earn slightly less than the minimum wage.

The benefits for low-income persons is through the earned income tax credit (SB 453 , PA 372), which mirrors the federal program, provides an additional income set-aside for residents earning less than $35,000 a year. For the 2008 calendar year, the state credit would be 10 percent of the federal credit, currently a maximum of $4,700. The credit will increase in 2009 to 20 percent of the federal credit.

The provision is expected to cost the state budget $136 million in the 2008-09 fiscal year and $300 million in 2009-10.

“Thanks to the Michigan Earned Income Tax Credit, Michigan’s lowest wage earners will have up to $880 more in their pocket. And it’s about time,” Granholm said. “That’s $880 to help pay for education, health care, insurance, home heating costs or whatever else they need.”

Granholm announced the bill signing on her weekly radio address, carried by members of the Michigan Association of Broadcasters.

“The enactment of this legislation is an affirmation that the state can work in a bipartisan fashion to address the serious role that poverty plays in the life of Michigan residents,” said Michigan Catholic Conference Vice President for Public Policy Paul Long, one of those present for the bill signing in Flint. “It is my belief that SB 453 will prove to be the best piece of legislation passed this year by the state of Michigan.”

The bill was part of a deal to keep federal exemptions in the state’s increased minimum wage and has been a key issue for Democratic legislators for some years, with the push growing stronger the last couple of years as the economy in the state declined. The changes are effective October 1, concurrent with the increase in the state’s minimum wage to $6.95, from $5.15.

Granholm also signed the bill that began the negotiations, HB 6213 (PA 373), that ensures federal exemptions to minimum wage and overtime, such as for tipped employees, continue to apply to the state minimum wage. Business and legislative leaders had feared that, under the minimum wage increase bill (SB 318 , PA 81), those exemptions had been erased.

Rep. Bill Huizenga (R-Zeeland), sponsor of HB 6213, said some 300,000 jobs were at risk unless the changes were enacted when the new minimum wage goes into effect October 1. “This was a much-needed bill to shore up Michigan jobs,” he said.

The package signed Friday also includes a youth minimum wage (SB 1364 , PA 375) that applies to those under 18. Businesses can pay the younger employees 85 percent of the current state minimum wage, as well as a lower trainee wage of $4.25 for the first 90 days.

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