Michigan Senate Bill SB1017

Michigan 2023-2024 Regular Session

• Introduced: 9/26/24
• Refer: 9/26/24

Caption

Corporate income tax: credits; aerospace and defense technology related research and development credit; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 277 & 677. TIE BAR WITH: SB 1018'24

Impact

This legislation could significantly influence the economic landscape for small businesses involved in aerospace and defense, particularly those classified as tier 1, tier 2, or tier 3 suppliers with annual revenues below $5 million. By providing substantial tax relief, the measure aims to foster an environment conducive to R&D, potentially leading to increased innovation and competitiveness among Michigan-based companies in high-tech sectors. Furthermore, the bill mandates annual reporting on the effectiveness and uptake of the credits, ensuring accountability and tracking of its economic impact.

Summary

Senate Bill 1017 is designed to amend the 1967 Income Tax Act of Michigan by introducing sections that outline tax credits specific to research and development (R&D) expenses incurred by qualified taxpayers. It allows a credit of 20% on expenses that exceed a base amount certified by the Michigan Strategic Fund. The bill is applicable for tax years from January 1, 2025, until December 31, 2028, effectively creating a temporary incentive for certain businesses focused on R&D in the aerospace and defense sectors, with a cap on total credits issued per year set at $100 million for research credits and $25 million for storage-related credits.

Contention

Points of contention surrounding SB 1017 may arise from concerns regarding the exclusivity of the tax credits to specific sectors and the potential implications for non-qualifying businesses. Critics may argue that such focused tax incentives could lead to an uneven playing field, favoring certain industries while neglecting others. Additionally, there may be debates on how effectively the Michigan Strategic Fund can manage and distribute these credits, with skepticism regarding whether the anticipated economic growth will be realized or if it will primarily benefit a limited number of larger corporations within the aerospace and defense industries.