The bill amends the Income Tax Act of 1967, specifically sections 623 and 695, to update the corporate income tax structure and the distribution of tax revenues. It establishes a corporate income tax rate of 6.0% on taxpayers with business activities in Michigan, detailing the adjustments to the corporate income tax base, including provisions for adding or deducting specific types of income and expenses. Notably, it clarifies the treatment of royalties and expenses paid to related entities, ensuring that transactions are conducted at arm's length and do not result in double taxation. Additionally, the bill allows for the carryforward of business losses incurred after December 31, 2011, to offset future tax liabilities.

In terms of revenue distribution, the bill modifies how tax revenues are allocated starting from the 2022-2023 fiscal year through the 2024-2025 fiscal year. It mandates that up to $1.2 billion be deposited into the general fund, with additional allocations to housing and community development funds, and specifies the distribution of remaining revenues to local road agencies and the state trunk line fund. The bill also sets forth future allocations for the 2025-2026 fiscal year and beyond, ensuring a consistent flow of funds to support local infrastructure and housing initiatives.

Statutes affected:
Substitute (H-1): 206.623, 206.695
House Introduced Bill: 206.623, 206.695
As Passed by the House: 206.623, 206.695