WeVote
Log In

Bill

Bill

SB 966

Individual income tax: credit; low income housing tax credit; provide for. Amends sec. 22 of 1966 PA 346 (MCL 125.1422) & adds sec. 22e. TIE BAR WITH: SB 0967'26, SB 0968'26

2025-2026 Regular Session Introduced by Jeff Irwin

Michigan will establish a state low-income housing tax credit program administered by MSHDA to work with the federal LIHTC to expand affordable housing.

ORDERED ENROLLED
#housing:other #individualincometax:credit
0
WeVote Research Nonpartisan
Bill Summary · SB 966

Summary of SB 966 (2025-2026) – Michigan

Purpose and intent

SB 966 proposes amendments to the state housing development authority framework to:
- incorporate an explicit state-level low-income housing tax credit (LIHTC) program administered by the Michigan State Housing Development Authority (MSHDA) and aligned with the federal LIHTC program.
- ensure the LIHTC program is implemented in a manner that supports construction and preservation of affordable housing, with an emphasis on projects located in Michigan and manufacturing components produced in-state where feasible.
- tie the enactment of this state LIHTC to other related bills (SB 967 and SB 968) as part of a package.

Key provisions and changes

  • Section 22 (MSHDA authority powers):

    • The bill continues to grant broad powers to MSHDA, including the ability to study housing needs, enter contracts, issue loans, acquire and manage property, set loan standards, and participate in federal housing programs.
    • It adds or strengthens authority-related provisions around administering and regulating housing projects, covenants running with the land to satisfy federal/state law requirements, and alignment with federal programs (e.g., low-income housing tax credits, HOME equivalents, etc.).
    • Several administrative, financial, and governance authorities are preserved or clarified, including ethics rules, debt management, and the ability to issue and service loans, foreclose, and manage properties.

  • New Section 22e – State LIHTC program (establishment and administration):

    • The Michigan LIHTC program would be established and administered by MSHDA to run alongside the federal LIHTC program.
    • Eligibility and reservations: MSHDA may reserve state tax credits for qualified low-income buildings that receive the federal LIHTC allocation or binding reservation/eligibility under the state’s qualified allocation plan (QAP). The state credits would apply to projects placed in service on or after January 1, 2027.
    • Annual reservation cap: The aggregate amount of state tax credits reserved in a calendar year must not exceed:
    • For 2027 onward: a base cap of $100 million, adjusted annually by the change in the U.S. CPI.
    • Additional amounts from prior-year cap excess or recaptures, and any credits disallowed/recaptured under the program.
    • Preference criteria: When reserving credits, preference is given to projects where at least 50% of building components are manufactured in Michigan.
    • Financial feasibility: The reserved state credit cannot exceed what is necessary, when combined with the federal credit, to ensure project feasibility. Credits are allocated to promote new or preserved housing units.
    • Fees: MSHDA may assess application, processing, and reporting fees to cover administering the state LIHTC program.
    • Eligibility certificates: After finalizing cost certification and determining qualified basis/plans, MSHDA issues an eligibility certificate for each project owner, detailing the annual state credit amount and the credit period (typically six years, per federal LIHTC structure, with Michigan's duration aligned to the federal framework).
    • Claiming credits: Project owners and equity owners may claim the state credit for each year of the credit period, consistent with the annual amount on the eligibility certificate. Pass-through entities may allocate credits to equity owners subject to internal arrangements and tax rules, with total annual claims capped at the certificate amount.
    • Transferability: Equity owners may assign all or part of their state credit to other eligible equity owners, provided assignments occur before the annual tax filing. Carryforwards may not be transferred.
    • Recapture: If the federal LIHTC is recaptured or disallowed, the state credit is proportionally recaptured to reflect the same project.
    • Reporting and compliance: A designated reporter must annually report project ownership, credit allocations, and totals to the Michigan Department of Treasury, with copies to the Department of Insurance and Financial Services. Treasury and the DIFS coordinate to ensure eligibility and reporting accuracy.
    • Definitions: The section provides explicit definitions for terms used in the LIHTC program (e.g., qualified allocation plan, qualified low-income building, reserved credit amount, designated reporter, equity owner, flow-through entity, etc.).

  • Enacting conditions:

    • SB 966 specifies that it will not take effect unless SB 967 and SB 968 (the companion bills forming the broader package) are enacted into law.

Who/what is affected

  • MSHDA: New/expanded duties to administer a state LIHTC program and to manage related processes, monitoring, and reporting.
  • Project owners and equity owners: Entities that own, operate, or finance qualified low-income buildings and their investors, who would receive or allocate state LIHTCs and must comply with reporting and eligibility requirements.
  • State departments: Michigan Department of Treasury and Department of Insurance and Financial Services will receive eligibility and reporting information and coordinate enforcement of credits and recaptures.
  • Developers and lenders: Developers of affordable housing using LIHTC structures and lenders participating in these projects would align with the state program rules, reserve credits, and comply with in-state manufacturing preferences where applicable.
  • Beneficiaries: Low- and moderate-income households seeking affordable rental or homeownership opportunities through LIHTC-supported projects.

Procedural and timeline aspects

  • Effective date dependent on companion bills: The act’s effective date is contingent on the enactment of SB 967 and SB 968.
  • Qualified projects and placement in service: State credits apply to qualified buildings placed in service on or after January 1, 2027.
  • Annual cap and adjustments: The annual reserved state credit cap begins at $100 million in 2027 and adjusts annually with CPI, plus adjustments for prior-year cap excesses and recaptured credits.
  • Certification and reporting timeline: After cost certification and determination of qualified basis, eligibility certificates are issued for each project, and annual reports are due from designated reporters to the Treasury and DIFS with transfers of information as required.

Overall impact

SB 966 would create and govern a Michigan-specific LIHTC program to complement the federal LIHTC, with a strong emphasis on in-state manufacturing of building components, feasibility alignment with federal credits, annual credit caps, and robust reporting/compliance mechanisms. The package appears to be designed to expand affordable housing production and preservation while ensuring state oversight and fiduciary safeguards.

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

Sign in to ask a question.