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HB 5937

Michigan business tax: credits; early termination of credit for a business located in a renaissance zone; allow. Amends sec. 433 of 2007 PA 36 (MCL 208.1433).

2023-2024 Regular Session Introduced by Cynthia Neeley

HB 5937 lets taxpayers and the Michigan Strategic Fund mutually terminate pre-2011 MBT Renaissance Zone credits early, before zone expiration, easing transition to the current tax.

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Bill Summary · HB 5937

Summary — HB 5937 (amends MCL 208.1433)

Title: Michigan business tax: credits; early termination of credit for a business located in a renaissance zone; allow.

Purpose / Intent

HB 5937 permits the early termination of Michigan Business Tax (MBT) renaissance zone tax credits by mutual agreement between a taxpayer and the Michigan Strategic Fund (MSF). The change is intended to allow businesses that hold legacy MBT renaissance zone credits to end those credits before the underlying renaissance zone designation expires (for example, to enable a transition to the current corporate income tax).

Key provisions

  • Amends section 433 of the Michigan Business Tax Act (MCL 208.1433).
  • Current structure retained: qualified businesses located in a renaissance zone may claim a nonrefundable MBT credit computed under existing rules (generally the lesser of (i) tax liability attributable to renaissance zone activity or (ii) 10% of adjusted services performed in the zone; special rules apply for businesses originally in a zone before 12/1/2002).
  • New authority: a taxpayer and the Michigan Strategic Fund may execute an amendment to an existing development agreement that terminates the renaissance zone MBT credit effective on a date before the renaissance zone designation expires.
  • Reaffirms existing rules, including:
    • The credit is nonrefundable (excess credit not refunded).
    • Activity related to casinos (and certain affiliated activities) and illegal activity cannot be used to calculate the credit.
    • Annual filing requirement in a department-determined format.
    • A prohibition on employing, paying speaker fees to, or providing remuneration to specified state employees (or related review board employees) for any year the credit is claimed and for three years after the last year a credit is claimed.

Who is affected

  • Primary: taxpayers (businesses) that currently hold MBT renaissance zone “legacy” credits under pre-2011 agreements and the Michigan Strategic Fund.
  • Secondary: state revenues (General Fund) to the extent taxpayers choose to terminate credits early; potential administrative impacts for MSF and Department of Treasury.
  • Not affected: businesses without legacy MBT renaissance zone credits or those not located in renaissance zones.

Background & fiscal impact

  • The MBT was replaced by the corporate income tax in 2011; certain preexisting MBT credits (legacy credits) continue to be claimed until exhausted. The renaissance zone MBT credit is one such legacy credit.
  • The bill is permissive (does not force termination) and would not directly impose costs on the state or local units. If credits are terminated earlier than otherwise would occur, general fund revenue could increase, but the House Fiscal Agency expects the overall fiscal effect to be small.
  • Based on available certificated-credit reporting, anticipated renaissance zone MBT credits claimed were estimated at roughly $3.0 million (FY2025), $1.5 million (FY2026), and $0.8 million (FY2027), with FY2027 expected to be the last year such credits would be claimed absent earlier termination.

Legislative status / timeline (selected)

  • Introduced in House by Rep. Cynthia Neeley: presented 9/17/2024.
  • Reported by Tax Policy Committee: 12/11/2024 (recommendation without amendment).
  • Passed House (with immediate effect): 12/13–12/18/2024 (Roll Call #515: Yeas 56, Nays 0).
  • Referred to Committee on Government Operations: 12/18/2024.
  • As of 1/22/2025, referred to Joint Committee on Energy and Technology.

Support / testimony

  • Testimony in support from Request Foods; Michigan Manufacturers Association indicated support during committee proceedings (12-11-24).

Prepared from House Fiscal Agency analyses and bill text (amending MCL 208.1433).

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

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