Bill Text: MI HB5798 | 2025-2026 | 103rd Legislature | Introduced

Michigan House Bill 5798

Introduced

Bill Title: Individual income tax: credit; community development tax credit; create. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding secs. 279 & 678. TIE BAR WITH: HB 5799'26, HB 5809'26

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced) 2026-04-21 - Bill Electronically Reproduced 04/16/2026 [HB5798 Detail]

Download: Michigan-2025-HB5798-Introduced.html

HOUSE BILL NO. 5798

April 16, 2026, Introduced by Rep. Tisdel and referred to Committee on Economic Competitiveness.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding sections 279 and 678.

the people of the state of michigan enact:

Sec. 279. (1) Subject to the criteria under this section, a qualified taxpayer that that has a preapproval letter issued after the effective date of the amendatory act that added this section and a certificate of completion issued under this section may claim a credit against the tax imposed by this part equal to 25% of the qualified taxpayer's eligible investment paid or accrued by the qualified taxpayer on the eligible property. However, if the eligible investment includes the rehabilitation of a historic resource, is a rural project, or is a project that is located in an LMI census tract, the fund may issue a preapproval letter for a credit of up to 50% of the qualified taxpayer's eligible investment paid or accrued by the qualified taxpayer on the eligible property.

(2) To be eligible for a credit under this section, a taxpayer shall submit an application to the fund for preapproval of a project. The fund shall develop and use a detailed application and compliance process to approve credits for projects under this section. The application must require an applicant to demonstrate local support for the project, the ability of the applicant to complete the project, and the applicant's need for the credit and whether the proposed eligible investment would occur without the credit. The applicant shall include a description of the proposed project and submit documentation with the application establishing that the project is located on eligible property. A taxpayer may apply for projects under this section for eligible investment on more than 1 eligible property in a tax year. Each project approved and each project for which a preapproval letter is issued under this section must be for an eligible investment on 1 eligible property. The fund shall consider the following criteria to the extent reasonably applicable for the type of project proposed when reviewing an application and approving a project under this section:

(a) Whether the project is financially and economically sound, as measured by projected revenue and the level of private sector and other contributions to the project, including, but not limited to, federal grants and federal tax credits and any state credits that may be available under this section.

(b) Whether the project converts vacant, abandoned, or unused public buildings to private use or redevelops blighted property, environmentally contaminated property, or functionally obsolete property.

(c) Whether the project will act as a catalyst for additional revitalization of the city, township, or village in which it is located.

(d) Whether the eligible property is located in a walkable downtown, node, or corridor.

(e) Any other additional criteria specific to each individual project that the fund considers appropriate for the determination of eligibility.

(3) Subject to the limitations under this section, the president of the fund or the president's designee shall approve or deny an application submitted under this section at a meeting of the board of directors of the fund not later than 91 days after receipt of an application that is considered administratively complete by the fund. If a project is denied under this section, a taxpayer is not prohibited from subsequently applying under this section for the same project or for another project. If the president or the president's designee approves an application for a project under this section, the fund shall issue a preapproval letter that states all of the following:

(a) The taxpayer is a qualified taxpayer.

(b) The maximum total eligible investment for the project for which credits may be claimed and the maximum total of all credits for the project when the project is completed and a certificate of completion is issued for the project.

(d) The project number assigned by the fund.

(4) Except as otherwise provided under this subsection, a project for which a preapproval letter has been issued under this section must be completed within 3 years. The fund may approve a 1-year extension for the completion of a project with an eligible investment of more than $75,000,000.00. A qualified taxpayer that fails to comply with the time frames set forth in the preapproval letter or complete the project within 3 years after the preapproval letter is issued is not prohibited from subsequently applying for the same project or for another project. A preapproval letter issued under this section is not transferrable.

(5) In addition to the credit allowed under subsection (1), the fund may approve an additional credit of not more than $5,000,000.00 for a single project that satisfies 1 or more of the following:

(a) The project includes qualified rehabilitation expenditures with respect to a qualified rehabilitated building that are eligible for a credit under section 47 of the internal revenue code.

(b) The project is eligible for an allocation under section 22b of the state housing development authority act of 1966, 1966 PA 346, MCL 125.1422b, of the low income housing credit established under section 42 of the internal revenue code, and the state housing development authority has provided the fund with a letter recommending an additional credit under this subsection for the project.

(c) The project includes an equity investment in a qualified community development entity that is eligible for a credit under section 45D of the internal revenue code.

(6) Except as otherwise provided under this subsection, the maximum amount of any credit approved for a single project under this section must not exceed $10,000,000.00 and the total of all credits for all projects approved under this section and section 678 must not exceed $200,000,000.00 each calendar year. Of the total amount of credits approved under this section and section 678 each calendar year, not less than 20% of those credits must be approved for rural projects or small projects. Beginning January 1, 2028 and each January 1 thereafter, the maximum amounts allowed under this subsection must be adjusted by the percentage increase in the Detroit Consumer Price Index for the immediately preceding calendar year. If the fund approves less than the maximum amount of credits allowed under this section and section 678 for a calendar year, then any unused amounts must carry forward into future calendar years. Any amount carried forward is in addition to the maximum amount allowed each calendar year. Amounts carried forward under this section are not subject to adjustment. If the fund determines that there are previously issued credits authorized under this section or section 678, the fund may reallocate those credits and approve 1 or more additional projects for the calendar year.

(7) If, after a taxpayer's project has been approved and the taxpayer has received a preapproval letter but before the taxpayer has made an eligible investment, other than soft costs, at the property, the taxpayer determines that the project cannot be completed as preapproved, the taxpayer may petition the fund to amend the project and the preapproval letter to increase the maximum total eligible investment for the project on which credits may be claimed under this section and the maximum total of all credits under this section for the project. A taxpayer may petition the fund to make any other amendments to the project or preapproval letter before a certificate of completion is issued. Amendments to the project or preapproval letter may include, but are not limited to, extending the duration of time provided to complete the project, as long as that extension does not exceed 10 years from the date of the preapproval letter.

(8) When a project under this section is completed, the taxpayer shall submit documentation that the project is completed, including a temporary certificate of occupancy for the project, if applicable, an accounting of the cost of the project, the eligible investment of each taxpayer if there is more than 1 taxpayer eligible for a credit for the project, and, if the taxpayer is not the owner or lessee of the eligible property on which the eligible investment was made at the time the project is completed, that the taxpayer was the owner or lessee of, or was a party to an agreement to purchase or lease, that eligible property when all eligible investment of the taxpayer was made. The president of the fund or the president's designee shall verify that the project is completed. When the completion of the project is verified, the fund shall issue a certificate of completion to each qualified taxpayer that has made an eligible investment on that eligible property. The certificate of completion shall state the total amount of all credits for the project and that total shall not exceed the maximum total of all credits listed in the preapproval letter for the project under this section, including any amendments, and shall state all of the following:

(a) That the taxpayer is a qualified taxpayer.

(b) The total cost of the project and the eligible investment of each qualified taxpayer.

(d) The qualified taxpayer's federal employer identification number or the Michigan treasury number assigned to the taxpayer.

(e) The project number.

(9) The cost of eligible investment for leased machinery, equipment, or fixtures is the cost of that property had the property been purchased minus the lessor's estimate, made at the time the lease is entered into, of the market value the property will have at the end of the lease. A credit for property described in this subsection is allowed only if the cost of that property had the property been purchased and the lessor's estimate of the market value at the end of the lease are provided to the fund.

(10) Except as otherwise provided under subsection (15), each qualified taxpayer and assignee or reassignee under subsection (13) that claims a credit under this section shall attach a copy of the certificate of completion and, if the credit was assigned, a copy of the assignment form provided for under this section or section 678 to the annual return filed under this part on which the credit under this section is claimed.

(11) Except as otherwise provided under subsection (13), a credit under this section must be claimed in the tax year in which the certificate of completion is issued to the qualified taxpayer or the immediately succeeding tax year. The credits approved under this section must be claimed after the application of all other credits allowed under this part.

(12) Except as otherwise provided under this subsection, if the credit allowed under this section for the tax year and any unused carryforward of the credit allowed under this section exceed the qualified taxpayer's, assignee's, or reassignee's tax liability for the tax year, that portion that exceeds the tax liability for the tax year must not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first. Except as otherwise provided in this subsection, the maximum time allowed under the carryforward provisions under this subsection begins with the tax year in which the qualified taxpayer first claims the credit under this section. If the credit allowed under this section for the tax year exceeds the qualified taxpayer's tax liability for the tax year, the qualified taxpayer may elect to have the excess refunded at a rate equal to 90% of that portion of the credit that exceeds the tax liability of the qualified taxpayer for the tax year and forgo the remaining 10% of the credit and any carryforward.

(13) A qualified taxpayer that has been issued a certificate of completion for a project approved under this section may monetize that credit and assign all or a portion of a credit allowed under this section. A credit assignment under this subsection is irrevocable and must be made in the tax year in which a certificate of completion is issued unless the assignee or reassignee is an unknown lessee. If a qualified taxpayer wishes to monetize that credit and assign all or a portion of its credit to a lessee but the lessee is unknown in the tax year in which the certificate of completion is issued, the qualified taxpayer may delay claiming and assigning the credit until the first tax year in which the lessee is known. A qualified taxpayer may claim a portion of a credit and assign the remaining credit amount. If the qualified taxpayer both claims and assigns portions of the credit, the qualified taxpayer shall claim the portion it claims in the tax year in which a certificate of completion is issued pursuant to this section. An assignee may monetize that credit and subsequently assign a credit, or any portion of a credit assigned under this subsection, to 1 or more assignees. The credit assignment or a subsequent reassignment under this subsection must be made on a form prescribed by the fund. The fund shall review and issue a completed assignment or reassignment certificate to the assignee or reassignee. An assignee or subsequent reassignee shall attach a copy of the completed assignment certificate to its annual return required under this part, for the tax year in which the assignment or reassignment is made and the assignee or reassignee first claims a credit, which shall be the same tax year.

(14) The fund annually shall prepare and submit to the standing committees of the senate and house of representatives with primary jurisdiction over tax and finance issues a report on the credits under this section and section 678. The report must include, without limitation, both of the following:

(a) A listing of the projects under this section and section 678 that were approved in the calendar year.

(b) The total amount of eligible investment for projects approved under this section and section 678 in the calendar year.

(15) The department shall develop a form, in lieu of an annual return, for a qualified taxpayer that is a nonprofit corporation that has been issued a certificate of completion under this section to file with the department to claim the credit allowed under this section. The nonprofit corporation must include a copy of the certificate of completion with the form filed under this subsection. Upon receipt of the completed form and copy of the certificate of completion, the department shall issue a refund payment to that nonprofit corporation equal to the amount of the credit certified under this section. For a qualified taxpayer who is a member of a flow-through entity that qualifies for the credit under this section, that taxpayer may claim a credit against the member's tax liability under this part based on the member's distributive share of business income reported from that flow-through entity or an alternative method approved by the department.

(16) As used in this section:

(a) "Area median income" means the median family income of a geographic area of this state, as annually estimated by the United States Department of Housing and Urban Development under section 8 of the United States housing act of 1937, 42 USC 1437f.

(b) "Blighted property" means property that meets any of the following criteria:

(i) Has been declared a public nuisance in accordance with a local housing, building, plumbing, fire, or other related code or ordinance.

(ii) Is an attractive nuisance to children because of physical condition, use, or occupancy.

(iii) Is a fire hazard or is otherwise dangerous to the safety of persons or property.

(iv) Has had the utilities, plumbing, heating, or sewerage permanently disconnected, destroyed, removed, or rendered ineffective so that the property is unfit for its intended use.

(v) Is tax reverted property owned by a qualified local governmental unit, by a county, or by this state.

(vi) Is property owned or under the control of a land bank fast track authority under the land bank fast track act, 2003 PA 258, MCL 124.751 to 124.774.

(vii) Has substantial subsurface demolition debris buried on site so that the property is unfit for its intended use.

(c) "Detroit Consumer Price Index" means the most comprehensive index of consumer prices available for the Detroit-Warren-Dearborn area from the United States Department of Labor, Bureau of Labor Statistics.

(d) "Eligible investment" means 1 or more of the following, attributable to an approved project, including an eligible investment that occurred before the issuance of the preapproval letter if the costs of the eligible investment are not otherwise reimbursed to the taxpayer or paid for on behalf of the taxpayer from any source other than the taxpayer:

(i) Any demolition, construction, alteration, rehabilitation, or improvement of buildings.

(ii) Site improvements.

(iii) The addition of machinery, equipment, or fixtures to the approved project.

(iv) Architectural, engineering, surveying, and similar professional fees, but not certain soft costs of the eligible investment, as determined by the fund, including, but not limited to, developer fees, appraisals, performance bonds, closing costs, bank fees, loan fees, financing costs, permanent or construction period interest, legal expenses, leasing or sales commissions, marketing costs, professional fees, shared savings, taxes, title insurance, bank inspection fees, insurance, and project management fees.

(e) "Eligible property" means property that meets 1 or more of the following conditions:

(i) Is determined to be a facility.

(ii) Is a historic resource.

(iii) Is blighted property.

(iv) Is functionally obsolete property.

(f) "Facility" means that term as defined in section 20101 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.20101.

(g) "Functionally obsolete" means that the property is unable to be used to adequately perform the function for which it was intended due to a substantial loss in value resulting from factors such as overcapacity, changes in technology, deficiencies or superadequacies in design, or other similar factors that affect the property itself or the property's relationship with other surrounding property, as determined by a Michigan advanced assessing officer or a Michigan master assessing officer.

(h) "Fund" means the Michigan strategic fund created under section 5 of the Michigan strategic fund act, 1984 PA 270, MCL 12.2005.

(i) "Historic resource" means a publicly or privately owned historic building, structure, site, object, feature, or open space, either manmade or natural, individually listed or located within and contributing to a historic district designated by the National Register of Historic Places, the state register of historic sites, or a local unit acting under the local historic districts act, 1970 PA 169, MCL 399.201 to 399.215.

(j) "LMI census tract" means a census tract identified by the United States Department of Housing and Urban Development as a census tract in which 51% or more of the households earn less than 80% of the area median income.

(k) "National Register of Historic Places" means that term as defined in 36 CFR 67.2.

(l) "Nonprofit corporation" means that term as defined under section 108 of the nonprofit corporation act, 1982 PA 162, MCL 450.2108.

(m) "Open space" means undeveloped land, a naturally landscaped area, or a formal or man-made landscaped area that provides a connective link or a buffer between other resources.

(n) "Previously issued credits" means the total amount of credits authorized by the fund under this section or section 678 for a taxpayer under this section or section 678 that meet both of the following:

(i) The taxpayer did not use any or a portion of the credits authorized under the preapproval letter under this section or section 678.

(ii) The fund determined that the credits previously authorized satisfy subparagraph (i).

(o) "Project" means the total of all eligible investments on an eligible property.

(p) "Qualified rehabilitation expenditure" means that term as defined in section 47 of the internal revenue code but is limited to amounts properly chargeable to a capital account for property within this state and the rehabilitation of a qualified rehabilitated building.

(q) "Qualified taxpayer" means a taxpayer that owns, leases, or has entered into an agreement to purchase or lease eligible property. For purposes of this section only, taxpayer includes a nonprofit corporation.

(r) "Rural project" means a project that is located in a city, township, or village that is not located in a county that is part of a metropolitan statistical area as defined by the United States Office of Management and Budget.

(s) "Small project" means a project with an eligible investment of $10,000,000.00 or less.

Sec. 678. (1) Subject to the criteria under this section, a qualified taxpayer that that has a preapproval letter issued after the effective date of the amendatory act that added this section and a certificate of completion issued under this section may claim a credit against the tax imposed by this part equal to 25% of the qualified taxpayer's eligible investment paid or accrued by the qualified taxpayer on the eligible property. However, if the eligible investment includes the rehabilitation of a historic resource, is a rural project, or is a project that is located in an LMI census tract, the fund may issue a preapproval letter for a credit of up to 50% of the qualified taxpayer's eligible investment paid or accrued by the qualified taxpayer on the eligible property.

(c) Whether the project will act as a catalyst for additional revitalization of the city, township, or village in which it is located.

(d) Whether the eligible property is located in a walkable downtown, node, or corridor.

(e) Any other additional criteria specific to each individual project that the fund considers appropriate for the determination of eligibility.

(a) The taxpayer is a qualified taxpayer.

(d) The project number assigned by the fund.

(5) In addition to the credit allowed under subsection (1), the fund may approve an additional credit of not more than $5,000,000.00 for a single project that satisfies 1 or more of the following:

(a) The project includes qualified rehabilitation expenditures with respect to a qualified rehabilitated building that are eligible for a credit under section 47 of the internal revenue code.

(c) The project includes an equity investment in a qualified community development entity that is eligible for a credit under section 45D of the internal revenue code.

(6) Except as otherwise provided under this subsection, the maximum amount of any credit approved for a single project under this section must not exceed $10,000,000.00 and the total of all credits for all projects approved under this section and section 279 must not exceed $200,000,000.00 each calendar year. Of the total amount of credits approved under this section and section 279 each calendar year, not less than 20% of those credits must be approved for rural projects or small projects. Beginning January 1, 2028 and each January 1 thereafter, the maximum amounts allowed under this subsection must be adjusted by the percentage increase in the Detroit Consumer Price Index for the immediately preceding calendar year. If the fund approves less than the maximum amount of credits allowed under this section and section 279 for a calendar year, then any unused amounts must carry forward into future calendar years. Any amount carried forward is in addition to the maximum amount allowed each calendar year. Amounts carried forward under this section are not subject to adjustment. If the fund determines that there are previously issued credits authorized under this section or section 279, the fund may reallocate those credits and approve 1 or more additional projects for the calendar year.

(a) That the taxpayer is a qualified taxpayer.

(b) The total cost of the project and the eligible investment of each qualified taxpayer.

(d) The qualified taxpayer's federal employer identification number or the Michigan treasury number assigned to the taxpayer.

(e) The project number.

(10) Except as otherwise provided under subsection (15), each qualified taxpayer and assignee or reassignee under subsection (13) that claims a credit under this section shall attach a copy of the certificate of completion and, if the credit was assigned, a copy of the assignment form provided for under this section or section 279 to the annual return filed under this part on which the credit under this section is claimed.

(14) The department shall develop a form, in lieu of an annual return, for a qualified taxpayer that is a nonprofit corporation that has been issued a certificate of completion under this section to file with the department to claim the credit allowed under this section. The nonprofit corporation must include a copy of the certificate of completion with the form filed under this subsection. Upon receipt of the completed form and copy of the certificate of completion, the department shall issue a refund payment to that nonprofit corporation equal to the amount of the credit certified under this section.

(15) As used in this section: