The bill amends the Income Tax Act of 1967, specifically section 695, to revise the distribution of revenue collected from state income taxes. It stipulates that, starting from the 2022-2023 fiscal year through the 2024-2025 fiscal year, the revenue must be allocated in a specific order: first, up to $1.2 billion to the general fund; second, up to $50 million to the Michigan housing and community development fund; third, up to $50 million to the revitalization and placemaking fund; and fourth, up to $500 million to the strategic outreach and attraction reserve fund. Any remaining revenue after these allocations will go to the general fund.

Beginning in the 2025-2026 fiscal year, the bill changes the allocation structure significantly. It mandates that up to $500 million be directed to the Department of Transportation for county road commissions, followed by another $500 million for cities and villages. The remaining funds will be deposited into the Michigan transportation fund. Starting in the 2026-2027 fiscal year, all revenue collected under this part will be directed to the Michigan transportation fund, ensuring a consistent funding source for transportation-related projects.

Statutes affected:
House Introduced Bill: 206.695