Bill
SB 115
Provides a 50% income tax credit for qualified Michigan investments up to a $3,000 per investor per year, with MSF certification and 10-year carryforward.
Status and timing
- Introduced: January 23, 2025
- Committee referral: Referred to Committee on Finance, Insurance, and Consumer Protection
- Effective for tax years beginning on or after January 1, 2025 (per bill text)
Purpose
- To create an individual income tax credit to encourage private cash (or cash-equivalent) investments in qualifying Michigan businesses by providing a credit equal to 50% of the qualified investment, subject to per-business and annual limits.
Key provisions
- Credit amount: 50% of the qualified investment made during the tax year.
- Dollar caps:
- Maximum credit per investor per qualified business: $3,000 in any one tax year.
- Aggregate cap per investor across all qualified businesses: $3,000 in any one tax year.
- Certification requirement:
- Investors must request certification from the Michigan Strategic Fund (MSF) within 60 days of making the investment.
- The MSF must develop an application and approval process and adopt program parameters and criteria (including what counts as a “qualified investment”).
- A certificate issued by the MSF is required to claim the credit and must be attached to the taxpayer’s return; the certificate must state amounts invested and the credit allowed.
- Nonrefundable / carryforward:
- The credit is nonrefundable. Unused credit may be carried forward up to 10 tax years.
- Securities compliance:
- Any investment for which credit is sought is subject to the Uniform Securities Act (2002) and must comply with applicable state and federal securities laws, rules, and regulations.
- Definitions:
- “Qualified business” (as certified by MSF) must, at investment time, be headquartered and domiciled in Michigan; have a majority of employees working in Michigan; restrict transactions to Michigan residents under 15 U.S.C. §77c(a)(11); receive at least 80% of gross revenues from in-state operations; and have at least 80% of assets in Michigan.
- “Qualified investment” means cash or cash-equivalent investment certified by MSF and not in a business where a family member of the investor is an owner or employee or where the investor (or family member) has a preexisting fiduciary relationship.
- “Family member” is broadly defined (spouse, parents, children, siblings, grandparents/ grandchildren, legal ward, guardians, step-relations).
- State fiscal note language:
- An enacting section expresses legislative intent that the Legislature annually appropriate sufficient funds from the State General Fund to the State School Aid Fund to fully compensate for any revenue loss resulting from the enactment.
Who is affected
- Individual taxpayers who make qualifying cash investments in certified Michigan businesses (would receive the tax credit).
- Michigan businesses that meet the “qualified business” criteria and seek investments.
- Michigan Strategic Fund (administration and certification responsibilities).
- State revenue/School Aid Fund: potential reduction in individual income tax receipts; legislative intent to appropriate funds to offset revenue loss to the School Aid Fund.
Administrative and procedural points
- Investors must secure MSF certification within 60 days of investment and keep the MSF certificate to attach to their income tax return.
- MSF must prepare rules, forms, and an approval program describing eligibility and investment conditions; MSF will ensure investments comply with securities laws.
- The credit becomes available for tax years starting January 1, 2025; unused credits may be carried forward up to 10 years.
Potential impacts (summary)
- Encourages in‑state private investment by reducing after‑tax cost to individual investors.
- May reduce individual income tax receipts (amount not specified); bill signals intent to offset lost revenue to the School Aid Fund via appropriations.
- Imposes new administrative duties on the Michigan Strategic Fund (certification, program rules).
Compiled from official sources — confirm details with the bill’s official record.
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