Bill
HB 4737
Michigan cuts corporate income tax from 6.0% to 4.25% by Oct 1, 2030, phased in over years, reducing state revenue as businesses pay lower taxes.
Purpose
- HB 4737 amends section 623 of the Income Tax Act of 1967 to phase down Michigan’s corporate income tax rate from 6.0% to 4.25% on a multi-year schedule, with the final rate taking effect October 1, 2030.
Key provisions
- Corporate tax rate schedule (applies to business activity by date):
- Before Oct 1, 2025: 6.0%
- 2025–2026 state fiscal year: 5.5%
- 2026–2027 state fiscal year: 5.25%
- 2027–2028 state fiscal year: 5.0%
- 2028–2029 state fiscal year: 4.75%
- 2029–2030 state fiscal year: 4.5%
- On and after Oct 1, 2030: 4.25%
- Retains and restates the corporate income tax base definition and many existing adjustments (adds and deductions) before allocation/apportionment, including:
- Add-backs: interest/dividends from other states, taxes on/net income, certain carrybacks/carryovers of NOLs.
- Deductions: foreign-source dividends/royalties in specified circumstances, interest on U.S. obligations.
- Specific treatment and add-back rules for related‑party payments for intangibles, with exceptions (arm’s-length, treaty, double-taxation avoidance, etc.).
- Eliminations for oil & gas production income/expenses and, for qualified taxpayers, certain mineral income/expenses.
- Business loss carryforward rule: business losses incurred after Dec 31, 2011 may be carried forward to offset allocated/apportioned corporate income tax base for up to 10 taxable years (first used in the year following the loss).
- Definitions added/clarified: “oil and gas” (subject to 1929 PA 48 severance tax) and “state fiscal year” (Oct 1–Sept 30).
Who is affected
- Corporations and taxpayers with business activity in Michigan and owners/beneficial owners of flow-through entities that have Michigan business activity.
- State fiscal impacts: gradual reduction in corporate tax revenue over the phase-down period compared with current law.
Legislative status & timeline
- Introduced March 13, 2025 (Rep. Steve Carra, with co-sponsors).
- Referred to Judiciary & Civil Jurisprudence (read first time Apr 3, 2025); later reported out and placed on General State Calendar (committee actions in April–May 2025).
- Electronically reproduced/introduced to House Finance Committee July 15, 2025.
Potential impact (summary)
- Lowers Michigan’s statutory corporate rate incrementally to 4.25% by Oct 1, 2030, benefiting in-state and multistate corporations through lower tax rates; likely to reduce General Fund/School Aid Fund revenue relative to current law, with the magnitude dependent on corporate income growth and behavioral responses.
Compiled from official sources — confirm details with the bill’s official record.
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