HOUSE BILL NO. 4367

April 11, 2023, Introduced by Reps. Hall, Bezotte, Wozniak, Tisdel, Schuette, Markkanen, Bierlein, DeBoer, Filler, Kunse, Martin, Kuhn, Alexander, DeBoyer, Harris and Outman and referred to the Committee on Tax Policy.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding section 672.

the people of the state of michigan enact:

Sec. 672. (1) Subject to the limitations under this section, for tax years that begin on and after January 1, 2023, a taxpayer may claim a credit against the tax imposed by this part for research and development expenses incurred in this state during the tax year in an amount equal to 15% of the qualified research and development expenses incurred in this state during the tax year. The maximum amount of the credit allowed under this section that any 1 taxpayer may claim in a single tax year is $2,000,000.00. The total amount of all credits allowed to be claimed under this section and section 282 to all taxpayers for a single tax year is $500,000,000.00. If the total amount of all credits claimed for a single tax year exceeds $500,000,000.00, the amount of the credit allowed for each taxpayer claiming a credit under this section and section 282 for that tax year shall be reduced on a pro rata basis.

(2) A taxpayer shall claim the credit under this section after all allowable nonrefundable credits under this part.

(3) If the amount of the credit allowed under this section exceeds the tax liability of the taxpayer for the tax year, that portion of the credit that exceeds the tax liability of the taxpayer for the tax year shall not be refunded, but may be carried forward to offset tax liability under this part in subsequent tax years for a period not to exceed 15 tax years or until used up, whichever occurs first.

(4) As used in this section:

(a) "Base amount" means the average amount of research and development expenses incurred in this state for the 3 tax years preceding the tax year for which the credit is being claimed under this section.

(b) "New research project" means a research and development project that begins after the effective date of the amendatory act that added this section and that qualifies for the credit under section 41 of the internal revenue code.

(c) "Qualified research and development expenses" means any new research and development expenses attributable to a new research project or any research and development expenses above the base amount.

(d) "Research and development expenses" means qualified research expenses as that term is defined in section 41(b) of the internal revenue code.

Enacting section 1. This amendatory act does not take effect unless Senate Bill No.____ or House Bill No. 4368 (request no. 01057'23) of the 102nd Legislature is enacted into law.