The bill amends the Income Tax Act of 1967 by adding two new sections, 279 and 679, which establish tax credits for qualified taxpayers located in or planning to relocate to aerospace defense zones. For tax years from January 1, 2026, to December 31, 2029, these taxpayers can claim a credit equal to 30% of their research and development expenses exceeding a certified base amount, with a cap of $10 million per taxpayer per year and a total of $100 million in credits available annually. Additionally, for the same period, a credit of 20% is available for expenses related to the storage and maintenance of finished goods inventory, capped at $1 million per taxpayer per year and a total of $25 million in credits annually.

The bill also outlines the requirements for claiming these credits, including the necessity of a certificate from the Michigan Strategic Fund, and specifies that the credits must be claimed after all other nonrefundable credits. If the credit exceeds the taxpayer's liability, it can be refunded or carried forward for up to five years. Furthermore, the bill mandates an annual report to be submitted by the department in cooperation with the Michigan Strategic Fund, detailing the effectiveness of the tax credits and the number of businesses applying for them.

Statutes affected:
Senate Introduced Bill: 206.1, 206.847