July 2025: 2.01% (B grade)

Michigan inventionINDEX July 2025: 2.01% (B grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Michigan inventionINDEX Scores – Last 12 months

Based on the provided historical data for the last 60 months, the Michigan inventionINDEX Score for July 2025 stands at 2.01%, earning a rating of B. This recent performance represents a notable increase over the average score for the past 12 months, which was 1.39%. This demonstrates a positive month-over-month change in the state’s innovative activity. However, it is slightly below the average score of 2.09% observed during the first year of the index, from July 2020 to June 2021, suggesting that while the most recent performance is strong, the state’s innovative output has experienced fluctuations over the long term.

A higher inventionINDEX Score and a corresponding strong rating, such as the B achieved in July 2025, reflect a period of heightened innovation within the state. A+ ratings, like those seen in October 2024, September 2023, and August 2023, indicate peak levels of innovative output. Such positive outcomes are often associated with increased research and development, a thriving startup ecosystem, and a highly skilled workforce. These conditions attract venture capital and other investments, leading to job creation and sustained economic growth. A consistently high score signals a robust and resilient economy, capable of adapting to new technological and market demands.

Conversely, a lower score, particularly with ratings of C-, D, or F, can have negative implications for Michigan’s economy. The lowest score recorded in the past 60 months was a -0.11% in July 2023, which corresponded to a rating of F. A score this low may suggest a slowdown in patent filings, a reduction in technological advancements, or a lack of new business formation. These factors can lead to a loss of competitive advantage, making it difficult to attract new talent and investment. A sustained period of low scores could signal underlying challenges in the state’s innovation infrastructure, potentially hindering long-term economic prosperity and requiring strategic interventions to reverse the trend.

Overall, the historical data shows that the inventionINDEX has experienced significant peaks and valleys over the last five years, from the high of 3.09% in September 2023 to the low of -0.11% in July 2023. While the most recent score of 2.01% is a positive sign, the overall trend is not one of consistent growth. The average score over the entire 60-month period is 1.62%, indicating that the July 2025 score is above the historical mean. This fluctuation highlights the dynamic nature of innovation and underscores the importance of continued monitoring and support to ensure Michigan remains a leader in the invention landscape.

Discussion:

In July, the Michigan inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a considerable downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Michigan office provides R&D tax credit consulting and advisory services to Detroit, Grand Rapids, Warren, Sterling Heights, Ann Arbor, Lansing, Flint, Dearborn, Livonia, Troy, Westland, Farmington Hills, Kalamazoo, Wyoming, Rochester Hills, Southfield, Taylor, Pontiac, St Clair Shores and Royal Oak.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.

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