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SB 995

Individual income tax: credit; work opportunity tax credit for qualified employees; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 279 & 679. TIE BAR WITH: SB 0994'26

2025-2026 Regular Session Introduced by Stephanie Chang and 2 co-sponsors

The bill creates a Michigan Work Opportunity Tax Credit for employers to reduce their tax liability when they hire qualified employees.

REFERRED TO COMMITTEE ON ECONOMIC AND COMMUNITY DEVELOPMENT
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Bill Summary · SB 995

Bill Summary: SB 995 (2025-2026) – Individual income tax credit; work opportunity tax credit for qualified employees

Purpose and intent

  • SB 995 proposes adding new sections (Sections 279 and 679) to the Michigan Public Act 281 of 1967 (the Michigan Income Tax Act) to establish a Work Opportunity Tax Credit (WOTC) for qualified employees.
  • The bill aims to incentivize employers to hire certain new employees by providing a nonrefundable income tax credit against Michigan personal income tax liability.

Key provisions and changes

  • Creation of a Work Opportunity Tax Credit (WOTC):
    • The state would authorize a credit against individual income tax for employers that hire qualified employees.
    • The credit is designed to encourage employment of individuals who may face barriers to employment (specific eligible categories typically include targets such as veterans, ex-felons, individuals from certain programs, or other defined groups—though the exact categories would be defined in the text of Sections 279 and 679).
  • Credit amount and structure:
    • The bill would specify the credit calculation, including the maximum credit per employee and any tiered or phase-in amount.
    • The credit is described as an income tax credit, implying it would reduce a taxpayer’s Michigan individual income tax liability on a dollar-for-dollar basis, up to the credit cap.
  • Eligibility and claiming process:
    • Employers would need to demonstrate that a hired employee meets the “qualified employee” criteria and that all program requirements (such as duration of employment or wage thresholds) are satisfied.
    • Administrative procedures would include documentation submission, verification by the state tax authority, and a mechanism to carry forward or adjust credits if applicable (e.g., unused credits could be claimed in future years or may be subject to expiration, depending on the bill’s specifics).
  • Relation to existing tax law:
    • The changes would be integrated into the Michigan Personal Income Tax Act, amending 1967 PA 281 by adding Sections 279 and 679.
    • The bill is linked with SB 994/26 (tied measure) and may require concurrent passage to align program design or funding.

Who would be affected

  • Employers in Michigan: Potentially eligible for a state tax credit for hiring qualified employees, reducing net payroll costs and encouraging hiring in targeted populations.
  • Qualified employees (new hires): Individuals who meet the defined criteria could indirectly benefit via employers’ increased willingness to hire and potential job stability if the credit influences hiring decisions.
  • Michigan Department of Treasury or tax administration: Responsible for administering and verifying credit claims, maintaining guidance, and ensuring compliance.

Procedural and timeline aspects

  • Introductory action (2026-05-20): Introduced by Senator Sue Shink.
  • Referral: Referred to the Committee on Economic and Community Development for consideration.
  • Sponsorship: Co-sponsors include Senator Stephanie Chang and Senator Rick Outman.
  • TIE BAR with SB 0994'26: The bill is intended to be considered in tandem with SB 0994'26, which may outline related or accompanying provisions (typical for tied-bar legislation to ensure simultaneous fiscal/legal alignment).

Practical considerations

  • The exact eligibility definitions, credit amounts, duration requirements, and administrative rules would be critical to assess the bill’s effectiveness and impact on employers and state revenues.
  • As a newly introduced measure, fiscal impact analyses, potential interaction with existing credits, and implementation timelines will be key topics in committee deliberations.

If you’d like, I can summarize the anticipated fiscal impact once the committee estimates are published or provide comparisons to similar work opportunity tax credits in other states.

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

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