WeVote
Log In

Bill

AF

Bill

HB 4142

Taxation: other; digital advertising services tax act; create. Creates new act.

2025-2026 Regular Session Introduced by Alabas Farhat

Imposes a Michigan digital advertising services tax on in‑state revenues from digital ads, with tiered rates and apportionment, effective Jan 1, 2026.

bill electronically reproduced 02/26/2025
#taxation:other
0
WeVote Research Nonpartisan
Bill Summary · HB 4142

Summary — HB 4142: “Digital Advertising Services Tax Act” (excerpted)

Note on source material
- The provided bill text appears to include two different measures (a Michigan “digital advertising services tax” and unrelated Illinois criminal‑code language about approaching peace officers). This summary focuses on the digital advertising services tax act text (the title and substantive tax provisions).

Purpose and intent
- Creates a new “digital advertising services tax” to impose a tax on revenues that firms derive from providing digital advertising services in the state, with the stated aims of generating state revenue for the State School Aid Fund and/or the Michigan Transportation Fund and establishing collection, administration, and compliance rules.

Key provisions
- Definitions
- “Digital advertising services”: advertising on a digital interface (e.g., banner ads, search engine ads, interstitials, comparable services).
- “Digital interface”: software, website, part of a website, or application accessible to a user.
- “Annual gross revenues”: income from all sources before expenses or taxes, GAAP‑computed.
- “Assessable base”: annual gross revenues from digital advertising services in the state (after apportionment).

  • Tax imposition (effective January 1, 2026)

    • Tax applies to annual gross revenues from digital advertising services after apportionment to the state.
    • Tiered rates based on the taxpayer’s global annual gross revenues:
    • $100,000,000 ≤ global revenue ≤ $1,000,000,000: 2.5%
    • > $1,000,000,000 ≤ $5,000,000,000: 5.0%
    • > $5,000,000,000 ≤ $15,000,000,000: 7.5%
    • > $15,000,000,000: 10.0%

  • Apportionment

    • In‑state taxable revenue = (revenues from digital advertising services in this state) × (revenues from digital advertising services in this state ÷ revenues from digital advertising services in the United States). (The bill requires apportionment by multiplying by that fraction.)

  • Administration, filing, and payment

    • Department of Treasury administers and collects the tax, with the department authorized to promulgate implementing rules (including rules to determine the state of derivation for revenues).
    • Filing thresholds and timing:
    • Annual return required for persons with ≥ $1,000,000 in annual gross revenues from digital advertising services in the state; annual returns due April 15 of the following year.
    • Quarterly estimated returns/payments required if a person reasonably expects in‑state revenues to exceed $1,000,000; estimated payments due April 15, July 15, October 15, and January 15. Estimated payments are creditable against the annual liability.
    • Recordkeeping: taxpayers must retain records supporting the calculation of taxable digital advertising revenues.

  • Revenue disposition

    • Revenue collected is to be distributed to either or both:
    • State School Aid Fund (per Michigan Constitution, art. IX, sec. 11), and/or
    • Michigan Transportation Fund (MCL 247.660).

  • Penalties and enforcement

    • The bill text states it provides penalties and enforcement procedures; the excerpt references administration under existing tax administration statutes (1941 PA 122, MCL 205.1–205.31). Specific penalty language was not included in the excerpt.

Who is affected
- Primary targets: large digital advertising businesses and platforms (publishers, ad networks, search engines, social media/platform companies) with significant global revenues that sell or provide digital advertising services that reach users in the state.
- Thresholds mean smaller local ad providers below $1,000,000 of in‑state revenue would not be required to file; global revenue thresholds determine rate tiers.
- Advertisers and publishers may experience indirect effects (contracting/pricing changes) as firms adjust to the new tax.

Procedural status and notes
- The excerpt shows an effective date for the tax of January 1, 2026.
- Source material contains mixed metadata and an unrelated Illinois bill provision; confirm final sponsor, chamber, and committee referrals with the official legislative docket for the correct jurisdiction and bill history before relying on procedural status.

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

Sign in to ask a question.