The bill amends the Michigan Business Tax Act by establishing a business income tax rate of 4.95% for all business activities occurring before January 1, 2025, and a significantly higher rate of 30.0% for activities on and after that date. It introduces adjustments to the business income tax base, including provisions for adding interest income, taxes on net income, and carrybacks of net operating losses, while allowing certain deductions for dividends and royalties received from foreign entities. Additionally, it outlines conditions under which taxpayers can deduct business losses and gains from the sale of residential rental units to qualified affordable housing projects.

Moreover, the bill modifies the requirements for taxpayers who elect to file returns and pay taxes under the act to claim certificated credits. Starting from tax years after December 31, 2024, taxpayers will no longer be required to file under this act if they choose to file under the income tax act, forfeiting any remaining certificated credits or unused carryforwards. It also clarifies that unitary business groups must file returns and claim credits collectively if any member is awarded a certificated credit. The bill further introduces new language regarding tax liability calculations and includes provisions for taxpayers with certificated credits under the natural resources and environmental protection act, allowing them to elect to pay the tax imposed by this act under certain conditions. The enactment of this bill is contingent upon the passage of several other specified bills from the 103rd Legislature.

Statutes affected:
Substitute (H-1): 208.1201, 208.1500
House Introduced Bill: 208.1201, 208.1500
As Passed by the House: 208.1201, 208.1500