HB 5807 amends Michigan’s Insurance Code provisions governing retaliatory taxes and other charges on foreign and alien insurers doing business in the state. The bill keeps the existing framework that allows Michigan to impose on out-of-state or foreign insurers the same deposits, taxes, fees, and other burdens that those insurers’ home jurisdictions impose on comparable Michigan insurers, with the stated purpose of discouraging discriminatory taxation against Michigan domestic insurers.
The bill also updates the criteria used to determine when a domestic insurer may be treated as an alien or foreign insurer for purposes of this retaliatory-tax section. Under the bill, the state treasurer, after consulting with the insurance commissioner, may make that determination if the insurer does not maintain its principal place of business in Michigan, does not keep key officers and personnel in the state, does not conduct a substantial portion of its insurance operations in Michigan, or does not comply with specified ownership and control requirements. The bill further provides that the state treasurer administers the tax under the state’s general tax collection procedures and that certain treasury confidentiality rules do not block disclosure of the tax return required by the act.
A new feature of the bill is a tax credit beginning with tax years starting on or after January 1, 2027. An insurer subject to the retaliatory tax may claim a credit equal to the housing opportunity tax credit it would have been eligible to claim as a qualified taxpayer for a qualified project under the income tax act, if it were paying the corporate income tax. This ties the insurance retaliatory tax to Michigan’s housing incentive framework and could reduce the net tax burden for insurers participating in qualifying housing projects.
The bill’s impact is primarily on insurers, especially foreign and alien insurers operating in Michigan, and on the state treasurer and insurance commissioner, who would continue to administer and enforce the retaliatory tax regime. It cross-references and interacts with multiple tax statutes, including the former single business tax act, the Michigan business tax act, and the income tax act, while also incorporating the housing opportunity tax credit provisions. It does not appear to create a new tax category so much as refine enforcement, domicile treatment, and credit eligibility within the existing insurance tax structure.
There is little recorded committee or floor discussion in the available materials, so the overall sentiment must be inferred from the bill text and its structure. The bill appears technical and administrative, with a policy goal of protecting Michigan insurers from unfavorable treatment in other states while also offering a housing-related tax incentive. The main point of potential contention is the expanded authority to treat certain domestic insurers as foreign or alien for tax purposes if they do not meet Michigan-based operational requirements, which could be viewed as a compliance burden or as a safeguard against tax avoidance. The bill is also tied to HB 5805 and would not take effect unless both bills are enacted.
HB 5807 would amend MCL 500.476a and 500.476b in the Insurance Code to preserve and refine Michigan’s retaliatory tax rules for foreign and alien insurers. It affects how the state treasurer and insurance commissioner determine tax liability, how retaliatory taxes are administered and disclosed, and how certain insurers may qualify for a new credit tied to the housing opportunity tax credit beginning in 2027. The bill interacts with multiple tax statutes and could reduce tax liability for some insurers while maintaining the state’s leverage against discriminatory out-of-state insurance taxation.
No committee testimony or recorded votes are provided, so there is no direct evidence of support or opposition from the legislative record included here. Based on the text, the bill appears to be a technical, policy-driven measure with a generally pro-industry and pro-Michigan-insurer rationale, coupled with a housing incentive component. The absence of recorded controversy suggests it may be viewed as an administrative update rather than a major policy fight, though the domicile and operational tests could draw scrutiny from insurers affected by the retaliatory tax rules.
The most notable point of contention is the bill’s expanded test for when a domestic insurer can be treated as an alien or foreign insurer for retaliatory-tax purposes. Insurers that do not maintain their principal place of business, key personnel, and substantial operations in Michigan could face different tax treatment, which may be seen as burdensome or as a way to prevent companies from claiming Michigan status without substantial in-state presence. Another possible issue is the new housing tax credit linkage, which may be welcomed by insurers investing in qualifying housing projects but could be questioned as a tax preference within an already specialized insurance tax regime.