This bill amends the Income Tax Act of 1967 by adding two new sections, 677a and 717a, which establish a tax credit for qualified research and development expenses incurred by taxpayers and employers, respectively, starting from tax years beginning on or after January 1, 2026. Under section 677a, taxpayers can claim a credit equal to 15% of their qualified research and development expenses, with a cap on the total credits allowed across all claimants in a calendar year set at $2,500,000. The bill specifies that if the total claims exceed this limit, the credits will be prorated among claimants. Additionally, any unused portion of the credit can be carried forward for up to 15 years.

Section 717a mirrors the provisions of section 677a but applies to employers, allowing them to claim a similar 15% credit against withheld taxes for their qualified research and development expenses. Like section 677a, it also includes a $2,500,000 aggregate cap on credits for all employers in a calendar year, with proration if claims exceed this amount. Both sections define "qualified research and development expenses" specifically in relation to advanced nuclear reactor technologies and stipulate that expenses incurred outside of Michigan do not qualify. The enactment of this bill is contingent upon the passage of several other related bills in the legislature.

Statutes affected:
Substitute (H-1): 206.1, 206.847
House Introduced Bill: 206.1, 206.847