HB 4186 — Michigan business tax: rate; rate increase and election to file under corporate income tax act; provide for, and allow for certain taxpayers. Amends secs. 201 & 500 of 2007 PA 36 (MCL 208.1201 & 208.1500). TIE BAR WITH: HB 4183'25, HB 4182'25, HB 4181'25, HB 4180'25, HB 4185'25, HB 4187'25, HB 4184'25

HB-4186, As Passed House, March 19, 2025 SUBSTITUTE FOR HOUSE BILL NO.

(a) For all business activity occurring before January 1, KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 2025, 4.95%.

(f) Except as otherwise provided under this subdivision, to KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 the extent deducted in arriving at federal taxable income, add any royalty, interest, or other expense paid to a person related to the taxpayer by ownership or control for the use of an intangible asset if the person is not included in the taxpayer's unitary business group.

(h) To the extent included in federal taxable income, deduct any earnings that are net earnings from self-employment as defined under section 1402 of the internal revenue code of the taxpayer or a partner of the taxpayer and for purposes of a partner of a taxpayer, it shall be the amount properly reported on a schedule K- KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 1-form 1065 as self-employment earnings for federal income tax purposes for the tax year.

For purposes of the calculation of the deduction under subsection (2)(i), a book-tax difference shall must only be used once in the calculation of the deduction arising from the taxpayer's business income tax base under this section and once in the calculation of the deduction KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 arising from the taxpayer's modified gross receipts tax base under section 203.

As used in this subsection, "business loss" means a KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 negative business income taxable amount after allocation or apportionment.

The department shall record a lien against the property subject to the operation agreement for the total amount of the deduction allowed under this KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 subsection.

(7) Subject to the limitations provided in this subsection, for a person that is a qualified affordable housing project, deduct an amount equal to the product of that person's taxable income that is attributable to residential rental units in this state owned by the qualified affordable housing project multiplied by a fraction, the numerator of which is the number of rent restricted units in this state owned by that qualified affordable housing project and the denominator of which is the number of all residential rental KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 units in this state owned by the qualified affordable housing project.

(b) "Qualified affordable housing project" means a person that is organized, qualified, and operated as a limited dividend housing association that has a limitation on the amount of dividends or other distributions that may be distributed to its owners in any KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 given year and has received funding, subsidies, grants, operating support, or construction or permanent funding through 1 or more of the following sources and programs:

(vii) Financed in whole or in part under the United States department of housing and urban development's Department of Housing and Urban Development's hope VI program as authorized by section KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 803 of the national affordable housing act, 42 USC 8012.

For a tax year that begins after December 31, 2024, a taxpayer that had previously elected to file a return and pay the tax imposed under this act is not required to continue to KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 file a return and pay the tax imposed under this act and may elect to file a return and pay the tax imposed under part 2 of the income tax act of 1967, 1967 PA 281, MCL 206.601 to 206.699, and, upon that election, the taxpayer is no longer eligible to claim any remaining certificated credits or unused carryforward under this act.

(2) A taxpayer with a certificated credit under section 435 or KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 437, which certificated credit or any unused carryforward may be claimed in a tax year ending after December 31, 2011 may elect to pay the tax imposed by this act in the tax year in which that certificated credit may be claimed in lieu of the tax imposed under part 2 of the income tax act of 1967, 1967 PA 281, MCL 206.601 to 206.699.

KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 (4) For tax years that begin after December 31, 2011, a taxpayer's tax liability under this act, after application of all credits, deductions, and exemptions, shall be is the greater of the following:

KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 (iii) For a taxpayer that is a partnership or subchapter S corporation, business income includes payments and items of income and expense that are attributable to business activity of the partnership or S corporation and separately reported to the members.

A taxpayer that elects to file a separate return as provided under this subsection and redeem a voucher certificate under a voucher agreement entered pursuant to this subsection and proceeding from an agreement entered pursuant to section 434(5) for an amount equal to the employment expenses and related engineering product development and administrative costs for the support of integrated battery cells, anodes and cathodes, and cell assembly shall create an additional 100 new jobs in this state, for a total of 400 new jobs, and the maximum allowable amount redeemed under this subsection or under section KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 510 shall not exceed $25,000,000.00 per year for no more than 3 years.

A Except as otherwise provided under subsection (1), a taxpayer that elects under this subsection to pay the tax imposed by this act shall continue to file a return and pay the tax imposed under this act for each tax year thereafter until the certificated credit granted under section 36109 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.36109, is complete and that credit is used up, or the taxpayer no longer owns the property KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 subject to the agreement, whichever occurs first.

The terms, conditions, and amount of the certificated credit that is the basis KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j 1 for the election shall continue and shall not be expanded in any manner that would increase the total amount of that certificated credit as a result of an election made under this subsection.

KAS H01354'25 (H-1)(H-1)_HB4186_APH_1 9sgvuxuth87j (h) House Bill No.

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