About the Credit:

The Michigan R&D Tax Credit is designed to incentivize research and development activities within the state, promoting innovation, job growth, and technological advancement. The credit applies to tax years beginning on or after January 1, 2025, and offers different benefits depending on the size of the business:

• Large Businesses (250+ employees): Can claim 3% of R&D expenses up to a base amount, and 10% for expenses above this base. The maximum credit available is $2,000,000 per tax year.
• Small Businesses (<250 employees): Eligible for a more favorable rate of 15% for R&D expenses exceeding the base amount, with a 3% rate on expenses up to the base. The maximum credit available is $250,000 per tax year.

Credit Limitations:
The total amount of credits available is capped at $100,000,000 per calendar year. If the total claims exceed this cap, a proration system will apply to allocate the credit.

Refundability:
If the credit exceeds a taxpayer’s liability for the tax year, the excess amount will be refunded.

Additional Incentives for University Collaboration:
Businesses collaborating with Michigan’s state research universities on R&D activities can earn an additional 5% credit on qualifying expenses, up to $200,000 per year. This requires a formal agreement between the business and the university, promoting partnerships that drive innovation and knowledge-sharing between industry and academia.

Claim Submission and Deadlines:
Tentative claims for the credit must be filed by March 15 for the preceding year’s activities. For tax year 2025, the deadline is April 1, 2026.