Economic development: other; Michigan business tax act; amend to reflect elimination of the Michigan strategic fund. Amends secs. 107, 111, 415, 419, 435 & 460 of 2007 PA 36 (MCL 208.1107 et seq.). TIE BAR WITH: SB 0631'25
SB 655 amends the Michigan Business Tax Act to update definitions and administration for several existing tax credits and exclusions. The bill revises the definitions of “certificated credit,” “compensation,” “gross receipts,” “inventory,” and related terms, and it updates references throughout the act to reflect the elimination or replacement of the Michigan Strategic Fund with the Bureau of Fair Competition and Free Enterprise, as described in the bill caption. It also preserves and clarifies the treatment of a wide range of receipts excluded from the gross receipts tax base, including certain pass-through income, investment income, taxes collected on behalf of others, Medicaid-related receipts, and discharge of indebtedness income.
The bill also adjusts the rules for the qualified start-up business credit, the early stage venture investment tax voucher program, the historic rehabilitation credit, and the E85/biodiesel service station credit. For the start-up credit, it keeps the five-year cap, the no-business-income requirement, and the compensation limitation, while defining eligibility and recapture rules. For historic rehabilitation, it maintains the 25% base credit and the additional community-impact credits, but updates approval, assignment, carryforward, recapture, and reporting provisions. For service stations, it continues the credit for converting fuel systems to E85 or biodiesel blends, subject to annual caps, certification, and recapture if the equipment is not maintained.
In terms of state-law impact, SB 655 would amend multiple sections of the Michigan Business Tax Act and cross-reference several other statutes, including the Michigan early stage venture investment act, the income tax act, the local historic districts act, and fuel and environmental-related laws. The bill does not create a new tax, but it changes how existing credits and exclusions are administered, who may claim them, and which state entities handle approvals and oversight. It also includes a tie-bar, meaning it would not take effect unless Senate Bill 631 is enacted.
The general sentiment reflected by the bill text and context is pro-economic-development and pro-credit preservation. The bill appears designed to keep existing incentive structures functioning after organizational changes in state economic development administration, while continuing support for startups, historic preservation projects, and alternative-fuel infrastructure. Because no committee transcripts or vote history were provided, there is no recorded floor or committee sentiment to summarize beyond the bill’s policy orientation.
The main points of contention likely involve the scope and cost of the tax expenditures, especially the large historic rehabilitation credit program, the continued availability of tax vouchers tied to venture investment, and the administrative complexity of preserving multiple legacy credits while changing the responsible state agency. Another likely issue is whether the bill’s detailed eligibility rules and caps sufficiently limit state revenue loss while still encouraging investment, redevelopment, and fuel conversion projects.
SB 655 would amend the Michigan Business Tax Act in several places, changing statutory definitions, refining the gross-receipts base, and updating credit administration and eligibility rules. It would affect taxpayers claiming startup, venture investment, historic rehabilitation, and E85/biodiesel conversion credits, as well as entities whose receipts are excluded from the tax base, including professional employer organizations, mortgage companies, investment entities, and certain health care and Medicaid-related businesses. The bill also updates references to state economic development bodies in light of the elimination of the Michigan Strategic Fund, shifting responsibilities to the successor entity named in the bill.
The bill’s overall tone is supportive of business incentives and economic development. It appears intended to preserve and modernize existing tax credit programs rather than eliminate them, with particular emphasis on startup businesses, historic preservation, and alternative fuel infrastructure. No committee testimony or recorded votes were provided, so there is no direct evidence of opposition or support from legislators in the available materials.
The most likely areas of contention are the fiscal cost and complexity of the tax credit structure, especially the historic rehabilitation credit’s multiple tiers, annual caps, and special project categories. Stakeholders could also disagree over whether the bill appropriately balances economic development goals against state revenue protection, and whether the transition away from the Michigan Strategic Fund is being implemented cleanly. The detailed recapture, assignment, and approval rules may also draw scrutiny from taxpayers, developers, and administrators who must comply with them.