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SB 425

Higher education: community colleges; remission of new jobs credit from withholding to community college districts; clarify application to professional employer organizations. Amends secs. 161 & 163 of 1966 PA 331 (MCL 389.161 & 389.163). TIE BAR WITH: SB 426'25

2025-2026 Regular Session Introduced by Joe Bellino

SB 425 redirects Michigan new jobs tax credits from withholding toward community college districts and clarifies professional employer organization eligibility for the program.

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#highereducation:communitycolleges #labor:jobtraining
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Bill Summary · SB 425

Legislative bill overview

SB 425 modifies Michigan's tax credit system for community colleges by clarifying how the "new jobs credit from withholding" applies to professional employer organizations (PEOs). The bill amends the Michigan Business Tax Act to redirect tax credits that would otherwise go to the state toward community college districts instead, while establishing clearer rules for PEO participation in this program.

Why is this important

Community colleges depend on diverse funding sources, and this bill potentially redirects state tax revenue to support their operations and workforce development programs. The clarification on PEO eligibility could either expand or restrict participation depending on the amendment's specifics, affecting which employers can access these credits and benefit community college funding.

Potential points of contention

  • Revenue impact: Directing tax credits away from the state general fund reduces overall state revenue available for other programs, requiring assessment of whether community college funding gains justify this trade-off
  • PEO definition and fairness: The clarification on how PEOs qualify could create winners and losers among staffing firms and their clients, raising questions about whether the rules are equitable across business structures
  • Administrative complexity: Implementing new rules for PEO withholding tax credit applications may impose compliance burdens on employers, PEOs, and community colleges without clear guidance on procedures

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

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