Michigan Senate Bill SB0235

Michigan 2025-2026 Regular Session

• Introduced: 4/22/25
• Refer: 4/22/25
• Report Pass: 6/12/25
• Refer: 6/12/25
• Report Pass: 6/17/25
• Engrossed: 6/25/25
• Refer: 6/25/25

Caption

Corporate income tax: credits; credit for use of sustainable aviation fuel; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 678. TIE BAR WITH: SB 236'25

Summary

SB 235 would amend Michigan’s Income Tax Act to create a refundable income tax credit for producers or blenders of sustainable aviation fuel (SAF) beginning with tax years on and after January 1, 2026. A qualified taxpayer could claim $1.50 per gallon of SAF that is produced or blended in Michigan and sold in Michigan for use in aircraft departing from a Michigan airport. The credit increases by $0.02 per gallon for each additional 1% reduction in life-cycle greenhouse gas emissions above 50%, up to a maximum of $2.00 per gallon. To qualify, the taxpayer must be engaged in producing or blending SAF in Michigan and must have a tax credit certificate issued by the Department of Environment, Great Lakes, and Energy. The certificate must be attached to the annual return, and the credit cannot exceed the amount authorized on the certificate. If the credit exceeds the taxpayer’s income tax liability, the excess is refundable, making the incentive more valuable than a nonrefundable credit. The bill is tied to SB 236, meaning it would not take effect unless that related bill is enacted into law.

Impact

The bill would add a new section 678 to the Income Tax Act of 1967 and create a state tax incentive specifically targeted at Michigan-based sustainable aviation fuel production and blending. It would affect corporate income tax liability for eligible fuel producers/blenders and would also rely on definitions and certification procedures established in the separate sustainable aviation fuel incentive program act. Because the credit is refundable, it could reduce state revenue beyond the taxpayer’s liability and result in direct refunds from the state treasury.

Sentiment

The available voting history suggests the bill had generally favorable support in the Senate. It was reported favorably from committee on a 7-0 vote and later passed the Senate on third reading by a 28-8 margin. No committee transcript is available here, so the record does not show detailed debate, but the vote pattern indicates broad support with some minority opposition.

Contention

The main policy question is whether Michigan should use a refundable tax credit to subsidize sustainable aviation fuel production and use, which can be viewed as an economic development and emissions-reduction incentive. Supporters likely favor the credit for encouraging in-state production, lower-carbon aviation fuel, and investment in a new energy sector. Opponents may be concerned about the fiscal cost of a refundable credit, the use of state tax expenditures to support a specific industry, and the bill’s dependence on certification and greenhouse-gas reduction calculations tied to the companion SAF incentive program. The tie-bar to SB 236 also means the credit is contingent on enactment of related legislation.