Michigan R&D Tax Credit Benefits for Businesses

Michigan and the R&D Tax Credit

State Credit Name: Michigan Research and Development (R&D) Tax Credit

Expiration Date: Permanent

Who Can Apply?
Corporations and flow-through entities. Small businesses (fewer than 250 employees) and large businesses (250+ employees) are eligible for different levels of the credit.

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Special Notes:

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.

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Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 847 Sumpter Road, Belleville, Michigan 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.

If you have any questions or need further assistance, please call or email our local Michigan Partner on (734) 328-2324.
Feel free to book a quick teleconference with one of our Michigan R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

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Michigan R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Michigan, businesses must first submit a tentative claim to the Michigan Department of Treasury. 1 For R&D expenses incurred during the 2025 calendar year, this tentative claim must be filed by April 1, 2026. 2 For all subsequent calendar years, the tentative claim is due by March 15 of the following year. 3 This initial submission must identify the unadjusted credit amount and include certain required information, such as qualified research expenses (QREs) incurred, and if applicable, QREs from collaboration with a Michigan research university. 1 While the Department of Treasury specifies that this tentative claim must be submitted “in a form and manner prescribed by the Department,” a dedicated, distinct form number for this initial tentative claim has not been widely published as of the current information. Businesses will then report the actual R&D credit on their annual corporate income tax return or withholding tax return for flow-through entities, which will be filed after the tentative claim and typically use a specific line or schedule on the main tax return to claim the credit.

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Michigan Patent of the Year – 2024/2025

Diet ID Inc. has been awarded the 2024/2025 Patent of the Year for revolutionizing dietary assessment. Their invention, detailed in U.S. Patent No. 12073935, titled ‘Systems and methods for diet quality photo navigation utilizing dietary fingerprints for diet assessment’, introduces a groundbreaking approach to evaluating diet quality through image-based pattern recognition.

The patented technology enables users to assess their dietary habits by selecting images that best represent their typical food intake. This intuitive method leverages composite images of dietary patterns, allowing for quick and accurate evaluations without the need for detailed food logging or recall. The system generates personalized dietary assessments in under a minute, providing insights into diet type, quality, and nutrient intake.

Diet ID’s innovation addresses the limitations of traditional dietary assessment methods, which often rely on time-consuming and error-prone techniques like food diaries and recalls. By utilizing image vignettes that form digital fingerprints of dietary patterns, the system offers a scalable and user-friendly solution for individuals and healthcare providers alike.

Validated against conventional methods and biomarkers, Diet ID’s approach has shown robust performance, making it a promising tool for improving dietary habits and overall health outcomes. With this patent, Diet ID Inc. is poised to make significant strides in the field of digital health and nutrition.