Michigan House Bill HB 5806

Michigan 2025-2026 Regular Session

• Introduced: 4/16/26
• Refer: 4/16/26

Caption

House Bill 5806 of 2026

Summary

House Bill 5806 would amend Michigan’s Income Tax Act to create a new state income tax credit tied to the state’s Housing Opportunity tax credit program. Beginning with tax years starting on or after January 1, 2027, a qualified taxpayer that receives an allocation statement from the Michigan State Housing Development Authority could claim a credit against income tax liability for a qualified housing project. The bill also allows a taxpayer to claim the credit earlier based on a reservation letter if the final allocation statement has not yet been issued, with a later amended return required if the final amount differs. The bill sets out how the credit is claimed, who may claim it, and how it interacts with federal low-income housing tax credits. It applies to project owners and certain direct or indirect owners through flow-through entities, and it requires documentation to be attached to the return. The credit is nonrefundable, but unused amounts may be carried forward for up to 10 years. If the related federal low-income housing tax credit is recaptured or disallowed, the state credit must be recaptured in the same percentage and added back to the taxpayer’s liability.

Impact

HB 5806 would add three new sections to the Income Tax Act—sections 279, 679, and 821—creating parallel state tax credit provisions for housing opportunity projects across different tax categories. It would affect taxpayers with qualifying housing projects approved under the State Housing Development Authority Act, including owners and members of flow-through entities, and would require coordination with allocation statements, reservation letters, and amended returns. The bill also links state credit recapture to federal low-income housing tax credit recapture, making the state credit dependent on federal compliance and project status.

Sentiment

No committee transcript or recorded vote information was provided, so there is no direct evidence of debate, support, or opposition in the available materials. Based on the bill text alone, the measure appears to be a technical tax-credit implementation bill designed to support affordable housing development and provide clearer administration of the credit. The absence of recorded votes or discussion prevents a stronger assessment of legislative sentiment.

Contention

The main potential points of contention are administrative complexity, the timing of claiming the credit, and the fiscal cost of creating a new state tax expenditure. The bill requires taxpayers to track allocation statements, reservation letters, amended returns, and federal recapture events, which may be burdensome for developers and flow-through investors. Another possible issue is that the credit is nonrefundable and limited to taxpayers with qualifying projects, so debate may focus on whether the incentive is sufficiently targeted and whether it effectively promotes affordable housing without reducing state revenue too much. No specific objections or supporters are identified in the available record.