Michigan State Tax Credits

More ways to save your hard-earned money from the tax man!

Michigan has some great State Tax Credits for you....

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap

 
Michigan

Michigan R&D Tax Credit

Overview:
Beginning in 2025, the Michigan R&D Tax Credit offers refundable incentives to businesses conducting qualified research within the state. The program features tiered benefits for small and large businesses, including bonuses for university collaborations.

Who It’s For:
Corporations and flow-through businesses conducting R&D in Michigan, with additional benefits for those partnering with Michigan-based research universities.

Four Key Highlights:

  1. Size-Based Incentive Structure

    • Small businesses (<250 employees) earn 15% above base R&D spend (up to $250K/year), while large businesses (250+ employees) receive 10% (up to $2M/year).

  2. University Collaboration Bonus

    • An extra 5% credit is available (capped at $200K) for businesses that formally partner with Michigan research universities.

  3. Refundable and Competitive

    • Unlike many state credits, this one is refundable. But with a $100M statewide cap, early filing is critical to avoid proration.

  4. Strict Filing Deadlines

    • Tentative claims must be submitted by March 15 each year (April 1 for 2026 only), with final credit reporting on the Corporate Income Tax return.

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Michigan Small Business Alternative Credit (2025)

Overview:
This tax incentive offers qualifying Michigan small businesses a reduced Corporate Income Tax (CIT) rate of 1.8% on adjusted business income, instead of the standard 6%, helping smaller companies preserve cash and stay competitive.

Who It’s For:
Corporations or flow-through entities (excluding insurance companies and financial institutions) with less than $20M in gross receipts and $1.3M in adjusted business income, where no officer/shareholder earns over $180K.

Four Key Highlights:

  1. Substantial Tax Savings
    – Eligible businesses pay just 1.8% CIT instead of 6%, often saving thousands annually in state taxes.

  2. Strict Compensation Threshold
    – Any officer or shareholder earning over $180,000 disqualifies the business (including compensation + income share).

  3. Group Disqualification Rule
    – If any member of a unitary business group (UBG) is disqualified, the whole group loses eligibility.

  4. Recapture Risk on Noncompliance
    – Moving, selling, or disposing of credited assets within five years can trigger recapture of the tax benefit on your return.

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