SB 790 redirects a portion of corporate income tax revenue to fund Michigan Space Grant Consortium (MSGC) programs. Beginning in the 2025-2026 fiscal year, the bill requires $250,000 (or the amount needed to fully fund NASA-related student grants, fellowships, and internships) annually to be allocated to support MSGC. This directly benefits Michigan residents pursuing undergraduate or graduate opportunities in space-related fields through NASA programs. The funds are transferred to the Michigan Economic Development Corporation for MSGC to administer, ensuring state support for student participation in federal space initiatives.
HB 5519 lowers Michigan's individual income tax rate to 3.9% for tax years beginning January 1, 2026, replacing the current 4.25% rate. This change applies to all Michigan residents who pay state income tax on their earnings. The bill amends Section 51 of the Income Tax Act to implement this rate reduction, which follows a temporary 4.25% rate period through 2025. This policy directly reduces the tax burden for individual taxpayers starting in 2026.
HB 5484 updates Michigan's tax rules for businesses operating across state lines, specifically clarifying how income from flow-through entities (like S-corps and partnerships) is allocated to Michigan for tax purposes. It revises sections of the Income Tax Act to better define when income earned outside Michigan must still be taxed by Michigan, particularly for nonresident business owners. Key changes include refining rules for sourcing income from services performed in Michigan, business activities conducted within the state, and capital gains on property. This directly affects business owners with multi-state operations who must now follow updated guidelines to determine Michigan's tax share.
HB 4143 changes how Michigan allocates corporate income tax revenue. Starting in the 2025-2026 fiscal year, it directs $500 million annually to county road commissions and $500 million to cities/villages for local road projects. After 2026, all corporate tax revenue from this source will fund the Michigan Transportation Fund, which distributes money for state transportation projects. This directly affects local governments receiving road funding and state budget allocations for transportation infrastructure.
House Bill 4503 modifies Michigan's corporate income tax credit program for state historic preservation. It allows qualified taxpayers to claim a credit for expenses incurred rehabilitating historic resources, with credit amounts varying between 25% and 30% of eligible costs depending on the type of resource. The bill also streamlines the application process by setting new approval timelines for the state historic preservation office. Significantly, it increases the total annual cap on these credits from $5 million to $100 million starting January 1, 2026, with specific allocations for different categories of historic properties.
HB 4603 imposes a progressive surcharge on Michigan corporations required to disclose pay ratios under federal SEC rules (17 CFR 229.402(u)). The surcharge rate (0% to 50%) increases based on the corporation's disclosed CEO-to-median-worker pay ratio, starting October 1, 2025. It applies only to corporations already filing these SEC disclosures, with rates rising from 0% for ratios under 50:1 up to 50% for ratios of 500:1 or higher. The surcharge is calculated on the corporation’s state tax liability before credits and is administered under Michigan’s existing tax laws. It does not apply to corporations not required to file state tax returns.
House Bill 4425 creates the Sustainable Aviation Fuel Incentive Program in Michigan. This program aims to encourage companies to produce or blend sustainable aviation fuel (SAF) within the state by offering corporate income tax credits. The Department of Environment, Great Lakes, and Energy (EGLE) will administer the program, certifying SAF that meets specific criteria, including source materials, technical standards, and a minimum 50% reduction in life-cycle greenhouse gas emissions compared to traditional jet fuel. The bill sets an annual cap on the total amount of tax credits approved, starting at $4.5 million for the 2025-2026 fiscal year and increasing to $9 million annually thereafter.
SB 557 creates tax credits for businesses in Michigan's designated aerospace defense zones. It offers a 30% credit on qualifying research and development expenses (capped at $10 million per business annually) and a 20% credit on storage/maintenance costs for finished goods inventory (capped at $1 million per business annually). To qualify, businesses must be designated by the Michigan Strategic Fund as defense contractors, aerospace manufacturers, or tiered suppliers with under $5 million in annual revenue. The credits require certification from the Strategic Fund, have annual spending limits ($100 million for R&D credits, $25 million for inventory credits), and cannot be claimed on the same expenses as other credits. This bill directly affects small-to-midsize aerospace and defense businesses operating within designated zones in Michigan.
HB 4128 creates a new corporate income tax credit for businesses generating power from advanced small modular reactors (SMRs) in Michigan. It directly affects utility companies and energy developers investing in SMR technology by providing a financial incentive to offset project costs. The key provision adds Section 678 to Michigan's tax code, allowing qualifying entities to claim a credit against their state corporate income tax liability for SMR-generated electricity. This policy change aims to support clean energy development without specifying expected outcomes or endorsing particular technologies. The bill passed the House on October 28, 2025, and is now pending final approval in the Senate.
HB 5166 creates a new tax credit program to improve food security by allowing certain food businesses (like farms, processors, or distributors) to claim a 65% credit against their state income tax for donating food to certified organizations. Qualified organizations - such as food pantries, soup kitchens, shelters, or regional food banks - must apply for certification annually and provide donors with written acknowledgments detailing the donation. The credit is capped at 50% of the business’s tax liability or $10,000 per year, whichever is lower, and must be claimed with annual tax returns. This directly affects food businesses making donations and certified food providers serving communities facing hunger.
