Legislative Analysis
Phone: (517) 373-8080
COMMUNITY FOUNDATION TAX CREDIT
http://www.house.mi.gov/hfa
Senate Bill 127 (S-1) as passed by the Senate Analysis available at
Sponsor: Sen. Sam Singh http://www.legislature.mi.gov
House Committee: Tax Policy
Senate Committee: Finance, Insurance, and Consumer Protection
Complete to 12-19-24
SUMMARY:
Senate Bill 127 would amend the Income Tax Act to create a nonrefundable individual income
tax credit for donations or contributions to the endowment fund of a community foundation.
The bill would allow a taxpayer to claim, for tax years beginning on and after January 1, 2026,
an income tax credit equal to 50% of the amount the taxpayer contributed during the tax year
to the endowment fund of a community foundation.
Community foundation would mean an organization that applies for certification on
or before May 15 of the tax year for which the taxpayer is claiming the credit and that
the Department of Treasury certifies for that tax year as meeting the requirements of a
community foundation as provided in section 3 of the Michigan Community
Foundation Act. 1 However, for purposes of the bill, the organization would only need
to have assets of at least $1.0 million to qualify for certification by the department.
The maximum credit allowed under the bill would be as follows:
• For a taxpayer other than a resident estate or trust, the credit could not exceed $100, or
$200 for a joint return.
• For a resident estate or trust, the credit could not exceed 10% of the taxpayer’s tax
liability for the tax year before claiming any credits allowed by Part 1 of the act or
$5,000, whichever is less, and the amount used to calculate the credits could not have
been deducted in arriving at federal taxable income.
If the amount of the credits allowed under the bill exceeds the tax liability of the taxpayer for
the tax year, the portion that exceeds the tax liability could not be refunded.
To claim the credit, a taxpayer would be required to receive a gift acknowledgment from the
community foundation indicating that the contribution was made to the endowment fund of the
foundation.
In addition, on or before July 1 of each year, the Department of Treasury would have to report
to the House Committee on Tax Policy and the Senate Finance Committee the total amount of
tax credits claimed under SB 127 for the immediately preceding year.
Proposed MCL 206.261
1
In section 3 of that act: http://legislature.mi.gov/doc.aspx?mcl-123-903
House Fiscal Agency Page 1 of 3
BACKGROUND:
The community foundation credit was repealed by 2011 PA 38 (HB 4361) as part of a bill
package that replaced the Michigan Business Tax with the Corporate Income Tax and made
general revisions to the personal income tax part of the Income Tax Act. 2 The repeal of the
credits was effective beginning with the 2012 tax year. Senate Bill 127 would reinstate the
credit with minor changes.
According to committee testimony, community foundations saw a decline in contributions and
donations after the repeal of the credits in 2011. Supporters argue that the bills will help to
encourage donations, particularly among first-time and younger donators who may become
lifelong contributors.
Senate Bill 127 (S-1) is substantively identical to the H-1 version of the bill that was reported
from House committee, except that the Senate substitute would apply for tax years beginning
on and after January 1, 2026 (instead of 2024).
FISCAL IMPACT:
As written, the bill would reduce individual income tax revenue by approximately $3.5 million.
Before the credit was eliminated effective for the 2012 tax year, there were roughly 35,000
claimants and the revenue reduction amounted to about $3.3 million. It is expected that the
credit would reduce revenue by a similar or slightly larger amount. To the extent that the credit
increases an existing refund, the full impact would be borne by the general fund. However, if
the credit reduces a taxpayer's existing liability, the impact would affect both the School Aid
Fund (approximately 25%) and the general fund (approximately 75%).
POSITIONS:
Representatives of the following entities testified in support of the bill (6-21-23):
• Council of Michigan Foundations
• Community Foundation for Southeast Michigan
• Capital Region Community Foundation
• Grand Traverse Regional Community Foundation
• Community Foundation of Greater Flint
The following entities indicated support for the bill:
• Michigan League for Public Policy (6-21-23)
• Kalamazoo Community Foundation (6-21-23)
• Michigan Nonprofit Association (6-21-23)
• Allegan County Community Foundation (6-21-23)
• Charlevoix County Community Foundation (6-21-23)
• Lapeer County Community Foundation (6-21-23)
• Lenawee Community Foundation (6-21-23)
• Community Foundation of Muskegon County (6-21-23)
2
HFA analysis of 2011 PA 38: http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/pdf/2011-
HLA-4361-6.pdf
House Fiscal Agency SB 127 (S-1) as passed by the Senate Page 2 of 3
 • Battle Creek Community Foundation (6-21-23)
• Flint Center for Educational Excellence (9-13-23)
The Department of Treasury indicated a neutral position on the bill if funded. (6-21-23)
Legislative Analyst: Alex Stegbauer
Fiscal Analyst: Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency SB 127 (S-1) as passed by the Senate Page 3 of 3


Statutes affected:
Substitute (H-1): 206.1, 206.847
Senate Introduced Bill: 206.1, 206.847
As Passed by the Senate: 206.1, 206.847
As Passed by the House: 206.1, 206.847
Senate Concurred Bill: 206.1, 206.847