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HB 5807

Insurance: other; housing opportunity credits against the retaliatory tax; provide for. Amends secs. 476a & 476b of 1956 PA 218 (MCL 500.476a & 500.476b). TIE BAR WITH: HB 5805'26, HB 5806'26

2025-2026 Regular Session Introduced by Joe Aragona and 2 co-sponsors

HB 5807 allows alien/foreign insurers to claim a housing opportunity credit against retaliatory taxes starting in 2027.

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Bill Summary · HB 5807

HB 5807 (2025-2026) – Michigan Insurance: Housing Opportunity Credits; Retaliatory Tax

Note: This summary focuses on the substantive provisions of HB 5807 and how they would operate if enacted, including who/what is affected and key timelines. The bill ties to HB 5805 and HB 5806.

Purpose and intent

  • Amend the Michigan Insurance Code (1956 PA 218) to modify how retaliatory taxes on foreign/alien insurers are assessed and to create a new mechanism for insurers to claim a housing-related tax credit beginning in tax years that start on or after January 1, 2027.
  • The overall objective includes ensuring fairness in interstate insurance taxation (discouraging discriminatory or excessive taxes) and facilitating housing opportunities through a credit mechanism.

Key provisions and changes

1) Retaliatory tax framework (Sections 476a and 476b)

  • The bill retains and reframes the retaliatory tax framework that requires alien/foreign insurers (those domiciled outside Michigan) to deposit securities and pay Michigan-based taxes/fees that mirror or approximate the charges imposed by the insurer’s home state or country.
  • If the foreign insurer does not comply with required deposits, taxes, fines, or other charges, Michigan can revoke the insurer’s certificate of authority after a 30-day noncompliance period.
  • The framework sets:
    • The basis for determining mirror charges for alien/foreign insurers.
    • The method for calculating local taxes (e.g., dividing total payments by gross premiums, minus return premiums, for fire department/salvage taxes or other local taxes).
    • The process for determining what constitutes an alien or foreign insurer domiciled outside Michigan, including criteria around maintaining a principal place of business, Michigan-based officers/personnel, and substantial Michigan operations (underwriting, sales, claims, legal, and medical operations) related to Michigan policyholders.
    • The role of the state treasurer and the insurance commissioner in determining domicile status and administering the tax.

2) Housing opportunity tax credit (new subsection 8 in Sec. 476a)

  • Beginning with tax years that begin on or after January 1, 2027, insurers may claim a credit against the retaliatory tax.
  • The credit amount equals the housing opportunity tax credit the insurer would be eligible to claim as a qualified taxpayer for a qualified project under Section 679 of the Michigan Income Tax Act (1977 Act 281, MCL 206.679), provided the insurer is paying the Michigan retaliatory tax.
  • Definitions:
    • “Qualified project” follows the Housing Development Authority framework defined in Section 22e of the State Housing Development Authority Act (1966 PA 346, MCL 125.1422e).
    • “Qualified taxpayer” aligns with the definition under Section 679 of the Michigan Income Tax Act (MCL 206.679).

3) Tax applicability (Sec. 476b)

  • Authorized insurers are subject to the tax framework under Sec. 476a, or to the former Single Business Tax Acts or Michigan Business Tax Acts, or to Part 2 of the Income Tax Act, whichever is greater.
  • This ensures that the tax assessment remains consistent with alternative tax regimes if applicable.

4) Enacting provisions

  • The effectiveness of the act is contingent on enacting HB 5805 and HB 5807 (the latter in this document) as a package (a tie-bar requirement).

Who/what would be affected

  • Affected entities: Domestic insurers in Michigan that are authorized to operate in Michigan but are domiciled outside the state (alien/foreign insurers) and their agents.
  • The bill affects:
    • Tax calculation and payment processes for retaliatory taxes.
    • Compliance obligations related to deposits of securities, payments for taxes/fines/certificates of authority, and maintaining Michigan-based operations.
    • Potential access to a housing opportunity tax credit against the retaliatory tax beginning in tax years starting in 2027.

Procedural and timeline aspects

  • Effective date and credit availability: Tax years beginning on or after January 1, 2027, for the housing opportunity credit against the retaliatory tax.
  • Enacting condition: The bill’s enactment is contingent on the simultaneous passage of HB 5805 and HB 5807 (a tie-bar among these bills).
  • Current status (as of the provided information): Introduced and referred to the Committee on Regulatory Reform on April 16, 2026; co-sponsors listed.

Summary takeaway

HB 5807 modernizes Michigan’s approach to retaliatory taxes on alien/foreign insurers, maintaining the deterrent against discriminatory taxation while introducing a new housing opportunity tax credit that insurers can utilize to offset retaliatory tax liabilities starting in 2027. The bill emphasizes maintaining fair interstate insurance competition, ensuring Michigan-based oversight, and leveraging housing development incentives as part of the tax framework.

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

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