Michigan House Bill HB4721

Michigan 2025-2026 Regular Session

• Introduced: 7/1/25
• Refer: 7/1/25

Caption

Transportation: motor fuel tax; incentives for the sale and production of biodiesel; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 679.

Summary

HB 4721 would add a new section to Michigan’s Income Tax Act creating refundable income tax credits for biodiesel-related activity from tax years beginning January 1, 2025 through December 31, 2030. Retail fuel dealers could claim credits based on the volume of biodiesel blends they sell through metered pumps at a motor fuel site, with higher per-gallon credits for higher biodiesel content: 2 cents for blends between 6% and 9%, 5 cents for blends between 10% and 19%, and 7 cents for blends of 20% or more. In-state biodiesel producers could also claim a 2-cent-per-gallon credit for biodiesel produced in Michigan.

Impact

The bill would amend the 1967 Income Tax Act by adding a targeted tax incentive for biodiesel sales and production, while tying the new credit to definitions in the Motor Fuel Tax Act and ASTM fuel standards. It would create two separate credit programs with annual caps: a $16 million cap for retail dealer credits and a $2 million cap for producer credits, with pro rata reduction if claims exceed the cap. Any credit amount exceeding a taxpayer’s liability would be refundable, making the benefit available even to taxpayers with little or no income tax due. The bill would also take effect only if a separate companion bill is enacted, indicating it is part of a linked legislative package.

Sentiment

Based on the bill text and available context, the measure appears generally supportive of biodiesel production and use, with a policy goal of encouraging cleaner or alternative diesel fuel markets in Michigan. There are no recorded committee transcripts or votes in the provided material, so no formal opposition or support is documented here. The structure of the bill suggests a pro-industry incentive approach rather than a controversial regulatory change.

Contention

The main potential points of contention are fiscal cost and the use of tax credits to subsidize a specific fuel market. The annual caps help limit exposure, but the refundable nature of the credit could still raise concerns about state revenue impacts. Another possible issue is whether the incentives are broad enough to benefit retailers and producers evenly, since the bill distinguishes between retail sales credits and producer credits and limits each through separate caps. The contingent effective-date provision also suggests the bill is intended to move with a related measure, which could be a point of procedural or policy concern.