This bill amends the Income Tax Act of 1967 by updating sections 623 and 695, which pertain to corporate income tax and the distribution of tax revenue, respectively. The corporate income tax is maintained at a rate of 6.0% on taxpayers with business activities in Michigan, with specific adjustments to the corporate income tax base outlined in subsection (2). Notably, the bill clarifies the treatment of royalties, interest, and other expenses paid to related parties, allowing for deductions under certain conditions. Additionally, it specifies that business losses incurred after December 31, 2011, can be carried forward to offset future tax liabilities.

In terms of revenue distribution, the bill establishes a structured allocation of tax revenue collected under this part, beginning with the 2022-2023 state fiscal year. It mandates that up to $1.2 billion be deposited into the general fund, with subsequent allocations to housing and community development funds, revitalization and placemaking funds, and strategic outreach and attraction reserve funds. The bill also outlines future revenue distributions for the 2025-2026 state fiscal year and beyond, ensuring that a portion of the revenue is directed to local road agencies and the state trunk line fund. The enactment of this bill is contingent upon the passage of several other specified bills in the legislature.

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