- Public Act 186 and 187 of 2024 – Legislation re-establishing Michigan’s R&D tax credit.
- Michigan Compiled Laws (MCL) § 206.677 (Corporate Income Tax Credit) – Statute defining corporate income tax R&D credit.
- MCL § 206.716 (Flow-Through Entity Credit) – Statute defining flow-through entity R&D credit.
- Corporate Income Tax (CIT) – Tax levied on C corporations in Michigan.
- Flow-Through Entity (FTE) – Entities passing income directly to owners/members.
- Withholding Tax (for FTEs) – Tax withheld by FTEs on behalf of members.
- Authorized Business – Business eligible to claim the R&D credit.
- Research and Development Credit (R&D Credit) – Tax incentive for performing qualified research activities.
- Qualified Research Expenses (QREs) in Michigan – Eligible costs for research performed within Michigan.
- IRC Section 41 (Federal Definition Alignment) – Michigan follows federal definition of qualified research.
- Base Amount (Michigan Specific) – Average annual QREs from three preceding years.
- Average Annual QREs (3 Preceding Calendar Years) – Calculation method for determining the base amount.
- Excess QREs (QREs over Base Amount) – Current QREs exceeding the calculated base amount.
- Small Business (Fewer than 250 Employees) – Business with fewer than 250 employees.
- Large Business (250 or More Employees) – Business with 250 or more employees.
- Small Business Credit Rate (15% on Excess) – 15% credit on QREs exceeding base amount.
- Large Business Credit Rate (10% on Excess) – 10% credit on QREs exceeding base amount.
- Up to Base Amount Credit Rate (3%) – 3% credit applied to the base amount.
- Small Business Annual Cap ($250,000) – Maximum credit allowed per year for small businesses.
- Large Business Annual Cap ($2,000,000) – Maximum credit allowed per year for large businesses.
- Additional Credit (University Collaboration) – Extra credit for collaborating with research universities.
- Michigan Research University – Public university or qualified non-profit research institute.
- Research University Collaboration Credit Rate (5%) – 5% credit on expenses for university collaboration.
- Research University Collaboration Cap ($200,000) – Annual limit for the university collaboration credit.
- Written Agreement (Required for University Collaboration) – Contract proving collaboration with a research university.
- Aggregate Annual Cap ($100 Million Statewide) – Total amount of credits available statewide annually.
- Small Business Set-Aside ($25 Million Portion) – Portion of total cap reserved for small businesses.
- Refundable Credit (for Excess over Tax Liability) – Credit exceeding tax liability is refunded.
- Nonrefundable Credits (Claimed before R&D Credit) – R&D credit is applied after nonrefundable credits.
- Tentative Claim (Mandatory Pre-Filing) – Required filing to reserve credit portion annually.
- Tentative Claim Deadline (April 1, 2026 for 2025) – Initial filing deadline for the 2025 tax year.
- Tentative Claim Deadline (March 15 for Subsequent Years) – Standard filing deadline for years after 2025.
- Proration (Reduction if Aggregate Cap is Exceeded) – Credits reduced proportionally if claims exceed cap.
- Pro Rata Share (of Available Credit) – Individual share of credit based on proration.
- Not Assignable or Transferable (Credit Restriction) – Credits cannot be sold or transferred to others.
- Calendar Year Basis (for QRE Calculation) – Expenses calculated based on the calendar year.
- Taxable Year (The year the credit is claimed) – Fiscal year in which the tax return is filed.
- Wages for Qualified Services (in Michigan) – Pay for employees performing research in Michigan.
- Supplies Used or Consumed (in Michigan) – Tangible items consumed during research in Michigan.
- Contract Research Expenses (3rd party research in Michigan) – Payments to contractors for research performed in Michigan.
- Michigan Department of Treasury (Administering Agency) – State agency managing the R&D tax credit.
- Unitary Business Group (UBG) – Group of related entities filing a combined return.
- Single Business Tax (SBT) (Prior R&D Credit Context) – Former Michigan tax system that included R&D credits.
- Michigan Business Tax (MBT) (Prior R&D Credit Context) – Former tax system replaced by Corporate Income Tax.
- House Bill 5100 and 5101 (Enacting Legislation) – Bills enacted as Public Acts 186 and 187.
- Public Act 148 of 2022 (Implementation Notice) – Related legislation impacting tax credit implementation.
- Decoupling (from Federal IRC § 174 Amortization) – Michigan may treat expenses differently than federal amortization.
- Short Taxable Year (Base Amount Treatment) – Adjustments required for tax years under 12 months.
- No Prior QREs (Base Amount = $0) – Base amount is zero if no prior research.
- Claim on Annual Tax Return – Final step to receive credit after tentative approval.
