HB 4185 changes how Michigan's general sales tax revenue is distributed. It directs 15% of the 4% sales tax to cities, villages, and townships through the Glenn Steil Revenue Sharing Act. Sixty percent goes to the state school aid fund (including all 2% tax from aviation fuel sales), while 27.9% of 25% from vehicle/fuel sales funds the transportation system. Additionally, it requires $9-12 million annually from computer software sales to the Michigan health initiative fund.
HB 4124 creates a tax credit for Michigan corporations that spend money on research and development for advanced small modular nuclear reactors (SMRs). It directly affects companies developing this specific type of nuclear technology within the state. The bill adds new sections to Michigan's tax code, allowing businesses to claim a credit against their corporate income tax for qualifying R&D expenses related to SMRs. This policy change aims to incentivize investment in emerging nuclear energy technology within Michigan. The bill passed the House on October 28, 2025, with 78 yeas and 26 nays.
HB 4187 modifies Michigan's corporate income tax law by adjusting how the tax base is calculated and clarifying revenue distribution. It requires corporations to add back certain taxes and expenses previously deducted for federal purposes (like state taxes or related-party royalties) and eliminates deductions for oil/gas and mineral-related income and expenses. For the 2021-2022 fiscal year, the bill directs $800 million of corporate tax revenue to the Michigan taxpayer rebate fund, while other years’ revenue flows to the general fund. This directly affects corporations operating in Michigan and the state’s budget allocation process.
HB 4186 increases Michigan's business income tax rate from 4.95% to 30% for all business activity occurring on or after January 1, 2025. This rate change directly affects businesses operating within Michigan that are subject to the state's business tax, including those previously filing under the corporate income tax act. The bill amends sections 201 and 500 of the Michigan Business Tax Act (2007 PA 36) to implement this rate increase and adjust the tax base calculations for businesses. The change represents a significant policy shift in how Michigan taxes business income, effective in 2025.
HB 5140 expands local governments' authority to impose hotel and short-term rental taxes. It allows cities in counties with 600,000-775,000 residents to levy up to 3% on accommodations (previously capped at 2%), while counties under 600,000 residents can tax up to 8% but require voter approval for rates above 5%. The bill directly affects hotels, vacation rentals, and online booking platforms that collect these taxes. Local governments must follow specific voter approval processes and administration rules under the amended law.
HB 5296 modifies Michigan's corporate income tax revenue distribution by removing the allocation to the "strategic outreach and attraction reserve fund" (which was repealed) and redirecting those funds to the "neighborhood roads fund" starting in the 2025-2026 fiscal year. The bill updates Section 695 of the Income Tax Act to reflect this change, specifying that after deposits to the general fund ($1.2 billion) and housing fund ($50 million), funds previously designated for the strategic reserve will instead go to the neighborhood roads fund (starting at $688 million in 2025-2026 and increasing annually through 2028-2029). This affects how corporate tax revenue is allocated to state programs, directly impacting the neighborhood roads fund's funding. The change applies to fiscal years beginning 2025-2026 and beyond, while other allocations (e.g., to housing and revitalization funds) remain unchanged.
