HOUSE BILL NO. 5979

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding section 678.

the people of the state of michigan enact:

Sec. 678. (1) Subject to the limitations under this section, for tax years beginning on and after January 1, 2023, a qualified taxpayer that voluntarily provides paid preadoptive leave to its employees may claim a credit against the tax imposed by this part in an amount equal to 50% of the amount of wages paid during the tax year to each qualifying employee during any period in which the qualifying employee is on preadoptive leave. The maximum amount of leave with respect to any qualifying employee for which a credit may be claimed under this section must not exceed 12 weeks. Any preadoptive leave that is paid by this state or a political subdivision of this state or that is required to be paid by law must not be included in determining the amount of the credit under this section for wages paid to a qualifying employee for preadoptive leave.

(2) The credit allowed under this section with respect to any qualified employee for the tax year must not exceed an amount equal to the product of the normal hourly wage rate of that qualified employee each hour for actual services performed for the employer and the number of hours for which preadoptive leave is taken. For a qualified employee who is not paid an hourly wage, that qualified employee's wages must be prorated to an hourly wage rate as prescribed by the department.

(3) If the amount of the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 5 years or until used up, whichever occurs first.

(4) As used in this section:

(a) "Preadoptive leave" means periods of absence related to the adoption, such as necessary trips during the adoption process and bonding and adjustment time immediately after placement.

(b) "Qualified employee" means an individual who has been employed by the employer for at least 1 year, and for the preceding year had compensation that does not exceed 60% of the amount applicable for highly compensated employees under section 414(q)(1)(B) of the internal revenue code for that same year.

(c) "Qualified taxpayer" means a taxpayer that is an employer who has a written policy offering preadoptive leave that satisfies both of the following:

(i) Provides at least 2 weeks of paid preadoptive leave for each full-time qualifying employee and a proportionate amount of preadoptive leave for each part-time qualifying employee.

(ii) The rate of payment for preadoptive leave is not less than 50% of the wages normally paid to that same employee for services performed for the employer.

(d) "Wages" means that term as defined in section 3306(b) of the internal revenue code.