Michigan House Bill HB4788

Michigan 2025-2026 Regular Session

• Introduced: 8/21/25
• Refer: 8/21/25

Caption

Taxation: specific tax; specific tax on certain utility personal property; provide for. Creates new act. TIE BAR WITH: HB 4787'25

Impact

The bill redefines how electric distribution infrastructure is taxed in Michigan. The exemptions under this bill specifically apply to property defined as 'qualified replacement electric distribution infrastructure,' which includes utility assets that support electric distribution yet do not include generation or transmission facilities. The impact of this legislation is significant as it aims to promote investment in electric utilities by alleviating some of the tax burdens associated with maintaining and replacing aging infrastructure. By doing so, it may foster improvements in service delivery and reliability for consumers.

Summary

House Bill 4788, known as the Replacement Electric Distribution Infrastructure Specific Tax Act, aims to establish a specific tax regime for certain utility infrastructure properties within Michigan. Specifically, the bill exempts qualified replacement electric distribution infrastructure from ad valorem property taxes starting from taxes levied after December 31, 2025. Instead, these properties will be subject to an annual statewide specific tax. This transition in tax treatment is intended to incentivize the modernization of utility infrastructure while reducing the tax burden on replacement assets.

Provision

The specific tax is structured to be adjusted yearly based on changes in the Consumer Price Index, with an initial rate set at 30 mills on the taxable value of the replaced infrastructure. This allows for a predictable revenue stream, which is to be distributed among various state and local taxing units, including cities, townships, and school districts. The bill also includes provisions for the disbursement of taxes and penalties for non-compliance, establishing a comprehensive framework for implementing and managing this new tax structure effectively.

Contention

Notably, the legislation is tied to House Bill 4787, which suggests that the enactment of HB 4788 is contingent upon the passage of this related legislation. Some stakeholders may express concerns regarding the state-level control over tax exemptions and the potential for diminished local revenue sources, as municipalities might experience financial implications due to the shifts in property tax revenues. Additionally, there may be debates surrounding how this bill aligns with broader goals of energy efficiency and sustainability in Michigan's utility sector. The efficacy of the revenue generated from this specific tax versus the ad valorem tax was also a subject of discussion among policymakers.