HB 5806: Individual income tax: credit; housing opportunity tax credits; create. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 281 & 678. TIE BAR WITH: HB 5805'26, HB 5807'26 - Michigan

As Passed by the Senate → Substitute (H-1) · 7 edits

MODERATE

The House substitute renumbers the bill's sections (from 281/678 to 279/679), changes how the housing opportunity tax credit amount is calculated by capping it at the lesser of the eligibility statement amount or the allocation report share, replaces the 'approval notice' claiming mechanism with a 'reservation letter' approach that requires amended returns if amounts differ, simplifies the qualified taxpayer definition, and removes special corporate tax recapture provisions. The enacting clause now references HB 5805 instead of SB 966 as a companion bill.

REQUIREMENT

The credit amount is now capped at the lesser of the eligibility statement amount or the taxpayer's allocated share on the allocation report, rather than simply equal to the allocation report amount. This creates a new ceiling on the credit.

When an eligibility statement has not yet been issued, taxpayers may now claim the credit based on the reservation letter amount (instead of attaching an approval notice). If the final eligibility statement differs, the taxpayer must file an amended return to adjust. Alternatively, the taxpayer may defer claiming until the eligibility statement is issued.

The standalone provision requiring amended returns when an updated allocation report changes a previously claimed credit amount (old subsection 4) is removed, though the concept is partially folded into the reservation letter adjustment mechanism.

ELIGIBILITY

The qualified taxpayer definition is simplified from three categories to two: an owner with an eligibility statement, or a direct/indirect interest holder in a project for which an eligibility statement was issued and credit was allocated. The separate category for owners with only an approval notice (pending eligibility statement) is removed from the definition.

A new dedicated subsection (3) explicitly allows members of flow-through entities that were allocated a housing opportunity tax credit under section 22e(6) to claim their allocated share against their own tax liability.

ENFORCEMENT

The recapture provision now specifies that federal low-income housing tax credit disallowance is determined 'as reported under section 22e(7)' of the state housing development authority act, adding a specific reporting reference. The special chapter 12 (corporate income tax) recapture treatment and the reference to insurance code section 476a are removed from the corporate tax section.

SCOPE

The enacting clause now requires HB 5805 instead of SB 966 as a companion bill for the act to take effect, indicating a legislative process change in how the housing development authority amendments are being handled.

As Passed by the House → As Passed by the Senate · 8 edits · Jul 3, 2026

MODERATE

The Senate substantially revised the housing opportunity tax credit provisions in both the income tax act and the insurance code. The credit amount is now determined solely by the allocation report rather than the lesser of two amounts, the term 'reservation letter' was replaced with 'approval notice,' a new category of qualified taxpayer was added for owners awaiting eligibility statements, and a new amended-return requirement was created for updated allocation reports. The insurance code section also expanded recapture rules to specifically address taxpayers subject to the chapter 12 premium tax.

Scope change

The bill's scope expanded slightly in two ways: (1) the insurance code recapture provision now explicitly covers taxpayers subject to the chapter 12 premium tax with tailored add-back rules, and (2) the definition of qualified taxpayer was broadened to include owners who have an approval notice but are still awaiting their eligibility statement.

REQUIREMENT

The credit amount is now equal to the amount listed on the allocation report, rather than the lesser of the eligibility statement amount or the allocated share. This simplifies the calculation and makes the allocation report the sole source for the credit amount.

A new subsection requires each qualified taxpayer to file an amended return if an updated allocation report (under section 22e(8)(b)) reduces or increases a previously claimed credit amount.

The separate flow-through entity member provision was removed. The general allocation report language in subsection (1) now covers flow-through entity members through the defined 'qualified taxpayer' category (iii).

ELIGIBILITY

'Reservation letter' was replaced with 'approval notice' throughout. A taxpayer whose owner has submitted a final cost certification but not yet received an eligibility statement may now either claim the credit using the approval notice or wait until the eligibility statement is issued, giving them a choice rather than being required to use the reservation letter.

A new category of qualified taxpayer was added: an owner of a qualified project that received an approval notice and has submitted a final cost certification and request for an eligibility statement, but the authority has not yet approved and issued the eligibility statement. Previously only owners with an already-issued eligibility statement qualified.

SCOPE

The insurance code section (now 678) expanded the recapture provision to reference section 476a of the insurance code and added specific rules for taxpayers subject to the chapter 12 premium tax, requiring recaptured credits to be added back to their chapter 12 tax liability rather than income tax liability.

DEFINITION

'Award' was removed from the list of defined terms and 'approval notice' was added in its place, reflecting the terminology change throughout the bill.

TECHNICAL

Section numbers changed from 279/679 to 281/678, and the enacting section companion bills changed from HB 5101, HB 5805, and HB 5807 to SB 966 and HB 5807.

Substitute (S-1) - 3 → House Concurred Bill · 5 edits

MODERATE

The bill was converted from a Senate substitute version to the House concurred final version, incorporating significant substantive changes to the housing opportunity tax credit. The most critical addition is a new requirement for taxpayers subject to the Business Tax (Chapter 12) to add back recaptured credits to their business tax liability rather than just their income tax liability. Additionally, the bill now includes a conditional clause requiring the passage of two other specific bills (Senate Bill No. 966 and House Bill No. 5807) before this act can take effect.

Scope change

The bill's scope was expanded to explicitly include taxpayers subject to the Business Tax (Chapter 12) in the recapture mechanism for federal low-income housing tax credits, and a new conditional enactment clause was added to link this bill's effectiveness to two other pending bills.

ENFORCEMENT

Added a specific rule requiring taxpayers subject to the Business Tax (Chapter 12) to include recaptured housing credits in their business tax liability, whereas previously only income tax liability was mentioned.

REQUIREMENT

Inserted a conditional enactment clause stating the bill does not take effect unless two other specific bills (Senate Bill No. 966 and House Bill No. 5807) are also enacted into law.

TECHNICAL

Corrected the section number for amended returns in the second part of the bill from section 325 to section 687, aligning it with the correct statutory reference for the amended return process.

Fixed a typo in the enacting clause changing 'peoplE' to 'people' and 'michigan' to 'Michigan'.

Removed internal legislative markup artifacts, such as page numbers and tracking codes (e.g., 'KAS', 'H05885'), which were present in the draft version but not in the final bill.

Substitute (H-3) → Substitute (S-1) - 6 · 3 edits

MINOR

The bill was renumbered from Section 279 to Section 281 and the referenced section numbers in the Michigan Compiled Laws were updated to reflect these changes. The core policy regarding the Housing Opportunity Tax Credit remains substantively unchanged, though the text was reorganized into new subsections and definitions.

TECHNICAL

The bill title was updated to 'SENATE SUBSTITUTE FOR' and the section number was changed from 279 to 281.

The citation in the bill description was updated to reference MCL sections 281 and 678 instead of 279 and 679.

The internal text of the tax credit section was renumbered and reorganized, but the rules for claiming the credit, eligibility requirements, and carryforward provisions remain identical to the previous version.

Substitute (H-1) - 2 → Substitute (H-3) · 1 edit

MINOR

The document shows only technical formatting updates to the bill header, changing the version identifier from 'H-1' to 'H-3'. No substantive policy changes, funding amounts, eligibility criteria, or definitions were altered.

TECHNICAL

Updated the bill version label in the header from 'Substitute (H-1)' to 'Substitute (H-3)', indicating a revision in the legislative drafting process without changing the bill's content.

As Passed by the House → Substitute (H-1) · 1 edit

MINOR

The bill text was reformatted from a standard House version to a Substitute version, incorporating specific line numbers and tracking marks used during legislative review. The substantive legal content regarding the housing opportunity tax credit, including eligibility, recapture rules, and effective dates, remains identical between the two versions.

TECHNICAL

The document structure was updated to include line numbers, page headers, and tracking codes (e.g., 'KAS') typical of a substitute bill, while the actual legislative text and policy provisions were not altered.

House Introduced Bill → As Passed by the House · 3 edits · Jun 25, 2026

MINOR

The bill was amended to replace the term 'allocation statement' with 'eligibility statement' and 'allocation report' throughout, likely to better reflect the specific documents issued by the housing authority. Additionally, the bill was updated to require coordination with three other specific bills (HB 5101, HB 5805, and HB 5807) before taking effect, and a minor typo in the enacting clause was corrected.

Scope change

The bill's scope regarding the specific documents required for claiming the tax credit was narrowed and clarified by changing the terminology from 'allocation statements' to 'eligibility statements' and 'allocation reports'.

DEFINITION

Replaced the term 'allocation statement' with 'eligibility statement' and 'allocation report' to align with the specific documentation required by the State Housing Development Authority.

REQUIREMENT

Updated the list of dependent bills required for the act to take effect, changing references from HB 5805 and HB 5807 to HB 5101 and HB 5805.

TECHNICAL

Corrected a typo in the enacting clause where 'peoplE' was changed to 'people'.

Individual income tax: credit; housing opportunity tax credits; create. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 281 & 678. TIE BAR WITH: HB 5805'26, HB 5807'26

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