HB 4124 creates a new Michigan income tax credit for qualified research and development expenses tied to advanced nuclear reactor technologies and related nuclear fuel work. Beginning with tax years starting on or after January 1, 2025, eligible taxpayers may claim a credit equal to 15% of qualifying in-state research expenses, and employers may claim a parallel 15% credit against withholding taxes for the same general category of expenses under a separate section of the Income Tax Act.
The bill is narrowly targeted to research conducted in Michigan that relates to the design, development, or improvement of advanced nuclear reactor technologies, analytical techniques, advanced nuclear fuel technologies for existing nuclear plants, and power uprates at existing nuclear plants. It defines key terms by reference to federal law and existing Michigan energy law, and it excludes research conducted outside the state. The bill also requires taxpayers and employers to file tentative claims by March 15, limits the total annual credits under both sections combined to $25 million, and requires the Department of Treasury to prorate claims if demand exceeds that cap. Unused credits are nonrefundable but may be carried forward for up to 15 years.
The bill’s impact on state law is to add two new tax credit provisions to the Income Tax Act of 1967: one for taxpayers and one for employers. It would reduce state tax liability for qualifying research activity in a specific nuclear energy sector, while also creating administrative duties for the Department of Treasury to review tentative claims, publish notices, and allocate credits within the annual cap. Because the credit is tied to in-state research, it is designed to encourage Michigan-based nuclear innovation and investment.
Overall sentiment appears favorable. The House committee reported the bill with a 13-2 vote, and the House later gave it immediate effect by a 78-26 vote, suggesting meaningful bipartisan support but not unanimity. The bill’s caption and tie-bar structure indicate it is part of a broader legislative package focused on advanced small modular reactor development and related incentives.
The main point of contention is likely the policy choice to use tax credits to subsidize a specialized industry, along with the $25 million annual cap and the requirement that claims be prorated if demand exceeds available credits. Another possible issue is the narrow eligibility design, which limits benefits to in-state research connected to advanced nuclear technologies and excludes other forms of research and development. The bill is also contingent on enactment of five related bills, so its effect depends on passage of the broader package.
Impact
HB 4124 would amend the Michigan Income Tax Act of 1967 by adding new sections 677a and 717a, creating a 15% credit for qualified research and development expenses related to advanced nuclear reactor technologies and a related employer withholding-tax credit. It would apply to tax years beginning on or after January 1, 2025, require tentative filings, cap total annual credits at $25 million across both credits, and allow unused amounts to be carried forward for up to 15 years. The bill would also condition its effectiveness on enactment of five companion bills.
Sentiment
The available vote history suggests the bill was generally well received, with the House committee reporting it favorably and the full House approving immediate effect by a substantial margin. The lack of recorded committee transcript discussion limits insight into detailed arguments, but the vote totals indicate support for using tax incentives to promote advanced nuclear research, while a notable minority remained opposed.
Contention
Likely areas of disagreement include whether the state should offer targeted tax credits to a specific energy technology sector, whether the $25 million annual cap is appropriate, and whether the benefits are too narrow or too generous. Opponents may also object to the bill’s dependence on a larger legislative package and to the administrative complexity of tentative claims and prorated credits. Supporters appear to favor the measure as an economic development and clean-energy innovation incentive focused on Michigan-based research.