Budget & Taxes (Business Taxes)

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tax revenue distribution by removing the allocation to the "strategic outreach and attraction reserve fund" (which was repealed) and redirecting those funds to the "neighborhood roads fund" starting in the 2025-2026 fiscal year.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.

HB 5292 allows corporations with pre-2012 approved tax credits (for job creation or investment) to claim the remaining unused portion against their corporate income tax liability starting in 2026, spread equally over 10 years. To qualify, businesses must maintain at least 95% of their full-time jobs (35+ hours weekly with payroll taxes withheld) as of September 30, 2025, each tax year. The bill also repeals Michigan’s Business Tax Act (2007 PA 36) for tax years beginning after December 31, 2025, ending that separate tax system. This directly affects corporations holding unused credits from older economic development programs.