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HB 4287

Individual income tax: deductions; certain broadband expansion grants; deduct from taxable income. Amends secs. 30, 623 & 815 of 1967 PA 281 (MCL 206.30 et seq.).

2025-2026 Regular Session Introduced by Greg Alexander and 19 co-sponsors

The bill lets Michigan taxpayers deduct eligible broadband grants from federal income to avoid state tax on those funds.

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION
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Bill Summary · HB 4287

HB 4287 — Summary

Sponsor: Rep. Karl Bohnak
Subject: Individual, corporate, and flow‑through income tax deductions for certain broadband expansion grants
Introduced: March 2025 (filed Mar. 10 / introduced Mar. 25, 2025)
Status (as of documents): Passed House May 21, 2025 (immediate effect); referred to Senate Committee on Finance, Insurance, and Consumer Protection May 29, 2025
Statutory change: Amends Income Tax Act of 1967 (MCL 206.30, 206.623, 206.815)

Purpose / intent

To prevent broadband expansion grant awards from being taxed at the state level when they are included in federal taxable income — effectively ensuring grant dollars awarded for Michigan broadband deployment are not reduced by Michigan income tax obligations.

Key provisions

  • Allows taxpayers filing under:
    • Michigan individual income tax,
    • Michigan corporate income tax, or
    • Michigan flow‑through entity tax to deduct, beginning with the 2023 tax year, grant money received from an “eligible grant,” but only to the extent that the grant amount is included in federal taxable income.
  • Defines “eligible grant” as grants issued by Michigan (or its political subdivisions), the federal government, or other states for providing, improving, or expanding broadband in Michigan, including (but not limited to):
    • Michigan Broadband Expansion Act grants and the Connecting Michigan Communities program;
    • Federal programs such as BEAD (Broadband Equity, Access, and Deployment), Middle Mile Grant Program, FCC Connect America Fund (and variants), ReConnect Program, Rural Digital Opportunity Fund, NTIA Tribal Broadband Connectivity Program, NTIA Broadband Infrastructure Program, Coronavirus Capital Projects Fund, State Digital Equity Capacity Grant Program, and USDA Rural Broadband Access Loan & Loan Guarantee Program.
  • Allows deduction of expenses attributable to an eligible grant (including depreciation) to the extent those expenses were deducted in determining federal taxable income.

Who is affected

  • Recipients of eligible broadband grants who are subject to Michigan individual, corporate, or flow‑through entity income taxes (e.g., private broadband providers, local governments/entities taxed at state level, businesses).
  • Potentially reduces state tax revenue; entities not subject to state tax (e.g., some nonprofits, certain government recipients) would not benefit.

Fiscal and procedural impacts

  • Department of Treasury estimates revenue reductions: ~ $8.4 million (FY 2024–25), ~$5.1 million (FY 2025–26) because of retroactivity to 2023, and roughly ~$4.0 million annually thereafter (through the term of grant projects).
  • Estimated > $2.3 billion in eligible broadband grant awards have been made; actual fiscal impact depends on how many awardees are taxable in Michigan.
  • May create timing/reconciliation issues between the year grant proceeds are received and the year related expenses are incurred for net income reporting.

Background & stakeholder positions

  • Bill mirrors prior House bill (HB 5682 from 2023–24 session).
  • Support: broadband industry groups (Peninsula Fiber Network, Broadband Association of Michigan), AT&T.
  • Opposition: Michigan Department of Treasury (concern over revenue loss and administration).

Next steps / timeline

  • Already passed the Michigan House with immediate effect (May 21, 2025). Pending consideration in the Senate Committee on Finance, Insurance, and Consumer Protection. If enacted by the Legislature and signed, provisions apply retroactively to tax year 2023.

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

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