Michigan House Bill HB5118

Michigan 2025-2026 Regular Session

• Introduced: 10/23/25
• Refer: 10/23/25

Caption

Individual income tax: credit; work opportunity tax credit for qualified employees; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 279 & 679. TIE BAR WITH: HB 5119'25

Impact

The anticipated impact of HB 5118 is significant for both businesses and individuals in Michigan. By encouraging employers to hire from targeted groups through tax incentives, the bill potentially aims to boost employment rates among these populations. The bill is expected to be most beneficial for businesses looking to reduce payroll taxes while also contributing to local economic growth by increasing the employability of individuals who may face barriers to traditional employment. This tax relief may be particularly impactful in areas with high unemployment or where certain demographics require additional support to enter the workforce.

Summary

House Bill 5118 aims to amend the Income Tax Act of 1967 by introducing a work opportunity tax credit for employers. This credit applies to wages paid to qualified employees, specifically those who are residents of Michigan and certified as members of targeted groups. The proposed credit is set at 50% of the amount that an employer would have been able to claim under the federal work opportunity tax credit, which is specified in section 51 of the Internal Revenue Code. The enactment of this bill is contingent upon the passage of House Bill 5119, which underscores the interconnected nature of these legislative measures.

Contention

Notable points of contention surrounding HB 5118 may include debates over the effectiveness and equity of such tax credit programs. Critics might argue that while tax incentives can spur temporary employment growth, they may not address the underlying issues faced by targeted groups such as skill gaps or lack of access to jobs. Furthermore, there may be concerns about the potential for abuse of tax credits if not properly monitored, which could lead to unintended consequences for state revenue. The contingent nature of the bill's effectiveness on the passage of a related bill (HB 5119) adds another layer of complexity and possible points of discussion in legislative forums.