The proposed bill amends the Income Tax Act of 1967 by adding a new section, Sec. 684, which introduces an annual surcharge for taxpayers required to disclose their pay ratios under SEC regulations. This surcharge will be applicable for tax years starting on or after October 1, 2025, and is based on the disclosed pay ratio of a taxpayer. The surcharge percentages range from 0% for a pay ratio of 50 to 1 or less, to 50% for a pay ratio of 500 to 1 or higher. Taxpayers who do not need to file a return or pay taxes under the existing law are exempt from this surcharge.

Additionally, the bill outlines that if an SEC filing does not disclose a pay ratio or if the disclosed ratio is not determined according to the specified SEC regulations, the Department of Revenue may calculate the correct pay ratio and the corresponding surcharge. The bill also defines key terms such as "disclosed pay ratio," "pay ratio," and "SEC" to clarify the provisions of the new section. The surcharge will be administered and enforced as part of the existing tax laws in Michigan.

Statutes affected:
House Introduced Bill: 206.1, 206.847