Individual income tax: credit; research and development credit for certain small employers; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 717.
The implementation of HB 5101 is expected to stimulate economic development in Michigan by reducing tax liabilities for companies heavily invested in R&D. Additionally, by allowing the collaboration between businesses and research universities to qualify for further tax credits, the bill promotes partnerships that could lead to technological advancements and job creation. This initiative aligns with the state’s objective of fostering an environment that attracts and retains innovative companies.
House Bill 5101 introduces amendments to the 1967 Public Act 281, aiming to provide tax credits for authorized businesses based on their research and development (R&D) expenditures from January 1, 2025, onwards. The bill outlines that employers with 250 or more employees can claim credits amounting to 3% on qualifying R&D expenses up to a base amount and 10% on expenses exceeding that base, while smaller businesses with fewer than 250 employees may claim 3% and 15%, respectively. The overall goal of the bill is to incentivize innovation and support business growth in Michigan.
The sentiment around HB 5101 appears generally positive among proponents who view it as a necessary step towards enhancing Michigan's business landscape. Supporters, including various trade associations and business advocacy groups, argue that the bill reflects an understanding of the financial strains on R&D and encourages investment in future growth. However, concerns remain among some stakeholders regarding the potential fiscal impact on state revenues and the fairness of the distribution of benefits.
Notable points of contention within the discussions concerning HB 5101 revolve around the viability of the proposed tax credits and their long-term effects on state funding. Critics express unease about the possibility of the credits leading to significant revenue losses for the state, especially if the claims exceed the caps established in the legislation. Additionally, there is debate about whether the bill sufficiently addresses the needs of smaller enterprises compared to larger corporations, bringing forward calls for amendments to ensure equitable access to the credits.