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HB 6134

Corporate income tax: rate; increasing of rate and revising the distribution of revenue collected; provide for.

2025-2026 Regular Session Introduced by Emily Dievendorf and 7 co-sponsors

Michigan intends to raise the corporate income tax rate to 10% starting Oct 1, 2026, and guide the resulting revenues to a multi-year, earmarked allocation plan for specific state

bill electronically reproduced 06/25/2026
#corporateincometax:rate #corporateincometax:revenuedistribution #schoolaid:other
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WeVote Research Nonpartisan
Bill Summary · HB 6134

Overview

HB 6134 (2025-2026 Session, Michigan) proposes to increase the Michigan corporate income tax rate and revise the distribution of revenue collected from the tax. The bill focuses on changing the tax rate over time and establishing a multi-year, stepwise revenue allocation plan, directing funds to various state funds and programs before general fund deposits.

Main purpose and intent

  • Increase Michigan’s corporate income tax rate and restructure how tax revenues are allocated to specific state funds and programs.
  • Create a long-term, explicit schedule for distributing corporate income tax receipts starting in the 2022-2023 fiscal year and extending through at least 2029-2030, with continuous deposits to multiple funds before general fund allocations.
  • Clarify computation of the corporate income tax base and define adjustments for purposes of calculating tax liability.

Key provisions and changes

  1. Corporate income tax rate (Sec. 623)

    • Before October 1, 2026: tax rate set at 6.0%.
    • Beginning October 1, 2026 and thereafter: tax rate increases to 10.0%.
    • Applies to taxpayers with Michigan business activity or ownership interest in Michigan, including flow-through entities.

  2. Corporate income tax base (Sec. 623(2)) – adjustments and calculations

    • Several adjustments are specified for determining the tax base, including:
      • Add back interest income and dividends from non-Michigan state obligations, with related deductions adjustments.
      • Add taxes on net income (including taxes paid by flow-through entities) to the extent deducted federally.
      • Add carrybacks/carries of net operating losses as allowed federally.
      • Deduct dividends/royalties to non-US persons or foreign entities to the extent included in federal taxable income, with exceptions and conditions.
      • Add back related-party royalties/expenses for intangible asset use, subject to criteria (arm’s-length pricing, business purpose, and other safeguards). Exceptions apply if the related transaction is justified (e.g., pass-through of a third-party transaction, double taxation risks, or treaty considerations).
      • Deduct interest income from U.S. government obligations.
      • Eliminate income and expenses related to oil and gas production and severance tax treatment (subject to definitions in the bill).
      • For certain qualified taxpayers, eliminate income and related expenses from mineral income, with corresponding deductions.

  3. Unitary business group (Sec. 623(3))

    • Defines the unitary business income as the sum of each member’s business income, minus intercompany income/dividends within the unitary group.

  4. Business losses (Sec. 623(4))

    • Allows deduction of business losses incurred after December 31, 2011.
    • Special transition rule for asset acquisitions under certain IRC sections permitting carrying forward losses to offset the allocated/apportioned tax base, with a 9-year carry-forward window or until used up.

  5. Oil, gas, and mineral definitions (Sec. 623(5))

    • Oil and gas definitions align with severance tax concepts (as defined in statute).

  6. Revenue allocation and deposits (Sec. 695)

    • Establishes annual deposit schedules for tax revenue starting with the 2022-2023 through 2029-2030 fiscal years, with the following general structure:
      • A baseline up to $1.2 billion for the general fund.
      • Additional allocations (when available) to targeted funds, including:
      • Michigan Housing and Community Development Fund (up to $50 million, where available).
      • Revitalization and Placemaking Fund (up to $50 million, where available).
      • Strategic Outreach and Attraction Reserve Fund (varied amounts, e.g., up to $500 million in some years).
      • Neighborhood Road Fund (varied allocations across years; substantial amounts designated in several years).
      • Healthy Michigan Fund (specific allocation in the 2024-2025 year).
      • State school aid fund (the balance after other deposits in some years).
      • Other year-specific targets as shown in the bill (e.g., neighborhood road fund, general fund balance).
    • The exact split evolves by year:
      • 2022-2023 through 2023-2024: fixed sequence with general fund first, then housing, then revitalization, then strategic reserve, then general fund with remaining balance.
      • 2024-2025 to 2029-2030: year-by-year adjustments, including increases to neighborhood road funds and other targeted funds, and final general fund deposits of the rest.

Who would be affected

  • Corporations and flow-through entities with Michigan business activity or ownership in Michigan.
  • Taxpayers subject to the corporate income tax base, including those impacted by unitary business group calculations and the various adjustments.
  • Stakeholders in state funds and programs that receive targeted revenue allocations (e.g., general fund, Michigan Housing and Community Development Fund, Revitalization and Placemaking Fund, Strategic Outreach and Attraction Reserve Fund, Healthy Michigan Fund, Neighborhood Road Fund, and state school aid fund).

Procedural and timeline aspects

  • Introduction date: June 25, 2026.
  • Referred to the Committee on Economic Competitiveness.
  • Effective timing for the rate change:
    • 6.0% prior to October 1, 2026.
    • 10.0% beginning October 1, 2026.
  • Revenue distribution schedule is specified for multiple fiscal years (2022-2023 through 2029-2030) with explicit annual deposit ceilings and allocations to specific funds before general fund deposits.
  • The bill would amend existing sections of the Michigan Income Tax Act of 1967 (PA 281), specifically sections 623 and 695, as amended by prior acts.

Potential impact considerations

  • Taxpayers could see a higher corporate tax rate effective October 1, 2026, increasing tax liability for Michigan-based corporations and certain out-of-state entities with Michigan activity.
  • The tax base adjustments are designed to mitigate double taxation and to align with federal tax concepts while preserving state revenue considerations.
  • The earmarking of revenue to specific funds could alter the availability of general fund resources in certain years and shape the state’s fiscal priorities, particularly for housing, infrastructure (neighborhood roads), revitalization projects, and health-related funding.
  • The long, year-by-year allocation plan introduces predictability for some programs but could complicate revenue forecasting for businesses and state budgeting.

If you’d like, I can summarize the bill’s potential fiscal impact in plain-language projections or compare it to current Michigan corporate tax parameters.

Compiled from official sources — confirm details with the bill’s official record.

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