Bill Text: MI SB1155 | 2025-2026 | 103rd Legislature | Introduced
Bill Title: Corporate income tax: business income; deductions for certain broadband expansion grants; provide for. Amends secs. 623 & 815 of 1967 PA 281 (MCL 206.623 & 206.815). TIE BAR WITH: SB 0209'25
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced) 2026-09-10 - Referred To Committee On Regulatory Affairs [SB1155 Detail]
Download: Michigan-2025-SB1155-Introduced.html
SENATE BILL NO. 1155
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 623 and 815 (MCL 206.623 and 206.815), section 623 as amended and section 815 as added by 2021 PA 135.
the people of the state of michigan enact:
Sec. 623. (1) Except as otherwise provided in this part, there is levied and imposed a corporate income tax on every taxpayer with business activity within this state or ownership interest or beneficial interest in a flow-through entity that has business activity in this state unless prohibited by 15 USC 381 to 384. The corporate income tax is imposed on the corporate income tax base, after allocation or apportionment to this state, at the rate of 6.0%.
(2) The corporate income tax base means a taxpayer's business income subject to the following adjustments, before allocation or apportionment, and the adjustment in subsection (4) after allocation or apportionment:
(a) Add interest income and dividends derived from obligations or securities of states other than this state, in the same amount that was excluded from federal taxable income, less the related portion of expenses not deducted in computing federal taxable income because of sections 265 and 291 of the internal revenue code.
(b) Add all taxes on or measured by net income including the tax imposed under this part to the extent that the taxes were deducted in arriving at federal taxable income including any direct or indirect allocated share of taxes paid by a flow-through entity under part 4.
(c) Add any carryback or carryover of a net operating loss to the extent deducted in arriving at federal taxable income.
(d) To the extent included in federal taxable income, deduct dividends and royalties received from persons other than United States persons and foreign operating entities, including, but not limited to, amounts determined under section 78 of the internal revenue code or sections 951 to 965 of the internal revenue code.
(e) Except as otherwise provided under this subdivision, to the extent deducted in arriving at federal taxable income, add any royalty, interest, or other expense paid to a person related to the taxpayer by ownership or control for the use of an intangible asset if the person is not included in the taxpayer's unitary business group. The addition of any royalty, interest, or other expense described under this subdivision is not required to be added if the taxpayer can demonstrate that the transaction has a nontax business purpose, is conducted with arm's-length pricing and rates and terms as applied in accordance with sections 482 and 1274(d) of the internal revenue code, and 1 of the following is true:
(i) The transaction is a pass through of another transaction between a third party and the related person with comparable rates and terms.
(ii) An addition would result in double taxation. For purposes of this subparagraph, double taxation exists if the transaction is subject to tax in another jurisdiction.
(iii) An addition would be unreasonable as determined by the state treasurer.
(iv) The related person recipient of the transaction is organized under the laws of a foreign nation which that has in force a comprehensive income tax treaty with the United States.
(f) To the extent included in federal taxable income, deduct interest income derived from United States obligations.
(g) Eliminate all of the following:
(i) Income from producing oil and gas to the extent included in federal taxable income.
(ii) Expenses of producing oil and gas to the extent deducted in arriving at federal taxable income.
(h) For a qualified taxpayer, eliminate all of the following:
(i) Income derived from a mineral to the extent included in federal taxable income.
(ii) Expenses related to the income deductible under subparagraph (i) to the extent deducted in arriving at federal taxable income.
(i) For tax years beginning on and after January 1, 2026, deduct, to the extent included in federal taxable income, grant money received from an eligible grant issued by this state, a political subdivision of this state, any other state, or the federal government under a state, local, or federal program for the purpose of providing, improving, or expanding broadband expansion in this state. As used in this subdivision, "eligible grant" means a grant issued under any of the following:
(i) The broadband expansion act of Michigan, 2020 PA 224, MCL 484.3251 to 484.3261.
(ii) The broadband equity, access, and deployment program established under 47 USC 1702.
(iii) The middle mile grant program established under 47 USC 1741.
(iv) The connect America fund, alternative connect America cost model, and enhanced alternative connect America cost model programs administered by the Federal Communications Commission under the Federal Communications Commission connect America fund order 14-190, 80 FR 4445, including various phases and revisions.
(v) The rural digital opportunity fund established and administered by the Federal Communications Commission under 47 CFR 54.801 to 54.806.
(vi) The reconnect program, also known as the rural econnectivity program, established under 7 CFR 1740.1 to 1740.100.
(vii) The tribal broadband connectivity program administered by the National Telecommunications and Information Administration.
(viii) The broadband infrastructure program administered by the National Telecommunications and Information Administration.
(ix) The coronavirus capital projects fund established under 42 USC 804.
(x) The state digital equity capacity grant program established under 47 USC 1723.
(xi) The digital equity competitive grant program established under 47 USC 1724.
(xii) Rural broadband access loan and loan guarantee program administered by the United States Department of Agriculture Rural Utilities Service under 7 CFR 1738.1 to 1738.350.
(xiii) The connecting Michigan communities grant program established under section 806 of 2018 PA 618 and section 841 of article 5 of 2020 PA 166.
(j) For tax years beginning on and after January 1, 2026, add, to the extent deducted in arriving at federal taxable income, expenses, including depreciation, attributable to an eligible grant as defined under subdivision (i).
(3) For purposes of subsection (2), the business income of a unitary business group is the sum of the business income of each person included in the unitary business group less any items of income and related deductions arising from transactions including dividends between persons included in the unitary business group.
(4) Deduct any available business loss incurred after December 31, 2011. As used in this subsection, "business loss" means a negative business income taxable amount after allocation or apportionment. For purposes of this subsection, a taxpayer that acquires the assets of another corporation in a transaction described under section 381(a)(1) or (2) of the internal revenue code may deduct any business loss attributable to that distributor or transferor corporation. The business loss shall must be carried forward to the year immediately succeeding the loss year as an offset to the allocated or apportioned corporate income tax base, then successively to the next 9 taxable years following the loss year or until the loss is used up, whichever occurs first.
(5) As used in this section, "oil and gas" means oil and gas that is subject to severance tax under 1929 PA 48, MCL 205.301 to 205.317.
Sec. 815. (1) Subject to section 847, beginning January 1, 2021 and each tax year after 2021, there is levied and imposed a flow-through entity tax on every taxpayer with business activity in this state unless prohibited by 15 USC 381 to 384. Except as otherwise provided under subsection (5), the flow-through entity tax is imposed on the positive business income tax base, after allocation or apportionment to this state, at the same rate levied and imposed under section 51 for that same tax year. A negative business income tax base of a flow-through entity, after allocation or apportionment to this state, is includible in the business income tax base of each member of the flow-through entity and is not available as an offset to the allocated or apportioned business income tax base of the flow-through entity in any other tax year for which an election is made under section 813.
(2) The business income tax base means a taxpayer's business income subject to the following adjustments, before allocation or apportionment, and the adjustment in subsection (4) after allocation or apportionment:
(a) Add interest income and dividends derived from obligations or securities of states other than this state, in the same amount that was excluded from federal taxable income, less the related portion of expenses not deducted in computing federal taxable income because of sections 265 and 291 of the internal revenue code.
(b) Add losses on the sale or exchange of obligations of the United States government, the income of which this state is prohibited from subjecting to a net income tax, to the extent that the loss has been deducted in arriving at federal taxable income.
(c) Deduct, to the extent included in federal taxable income, income derived from obligations, or the sale or exchange of obligations, of the United States government that this state is prohibited by law from subjecting to a net income tax, reduced by any interest on indebtedness incurred in carrying the obligations and by any expenses incurred in the production of that income to the extent that the expenses, including amortizable bond premiums, were deducted in arriving at federal taxable income.
(d) Add charitable contributions to the extent deducted in arriving at federal taxable income.
(e) Add all taxes on or measured by net income including the tax imposed under this part to the extent that the taxes were deducted in arriving at federal taxable income.
(f) Deduct guaranteed payments for services rendered by a member who is an individual to the extent that those guaranteed payments were included in federal taxable income.
(g) Deduct, to the extent included in federal taxable income, all of the following:
(i) The amount of a refund received in the tax year based on taxes paid under this part.
(ii) The amount of a refund received in the tax year based on taxes paid under the city income tax act, 1964 PA 284, MCL 141.501 to 141.787.
(h) Deduct business income received as a member of another flow-through entity to the extent that the business income increased federal taxable income.
(i) Eliminate all of the following:
(i) Income from producing oil and gas to the extent included in federal taxable income.
(ii) Expenses of producing oil and gas to the extent deducted in arriving at federal taxable income.
(iii) Income derived from a mineral to the extent included in federal taxable income of a qualified taxpayer.
(iv) Expenses related to the income deductible under subparagraph (iii) to the extent deducted in arriving at federal taxable income.
(j) For tax years beginning on and after January 1, 2026, deduct, to the extent included in federal taxable income, grant money received from an eligible grant issued by this state, a political subdivision of this state, any other state, or the federal government under a state, local, or federal program for the purpose of providing, improving, or expanding broadband expansion in this state. As used in this subdivision, "eligible grant" means a grant issued under any of the following:
(i) The broadband expansion act of Michigan, 2020 PA 224, MCL 484.3251 to 484.3261.
(ii) The broadband equity, access, and deployment program established under 47 USC 1702.
(iii) The middle mile grant program established under 47 USC 1741.
(iv) The connect America fund, alternative connect America cost model, and enhanced alternative connect America cost model programs administered by the Federal Communications Commission under the Federal Communications Commission connect America fund order 14-190, 80 FR 4445, including various phases and revisions.
(v) The rural digital opportunity fund established and administered by the Federal Communications Commission under 47 CFR 54.801 to 54.806.
(vi) The reconnect program, also known as the rural econnectivity program, established under 7 CFR 1740.1 to 1740.100.
(vii) The tribal broadband connectivity program administered by the National Telecommunications and Information Administration.
(viii) The broadband infrastructure program administered by the National Telecommunications and Information Administration.
(ix) The coronavirus capital projects fund established under 42 USC 804.
(x) The state digital equity capacity grant program established under 47 USC 1723.
(xi) The digital equity competitive grant program established under 47 USC 1724.
(xii) Rural broadband access loan and loan guarantee program administered by the United States Department of Agriculture Rural Utilities Service under 7 CFR 1738.1 to 1738.350.
(xiii) The connecting Michigan communities grant program established under section 806 of 2018 PA 618 and section 841 of article 5 of 2020 PA 166.
(k) For tax years beginning on and after January 1, 2026, add, to the extent deducted in arriving at federal taxable income, expenses, including depreciation, attributable to an eligible grant as defined under subdivision (j).
(3) For a taxpayer that has a direct, or indirect through 1 or more other flow-through entities, ownership or beneficial interest in a flow-through entity for which an election was made under section 813 and that reported positive business income in a tax year ending on or within the taxpayer's tax year, the adjustments in subsection (2) shall must not include the taxpayer's share of the electing flow-through entities adjustments under subsection (2).
(4) For a taxpayer that has a direct, or indirect through 1 or more other flow-through entities, ownership or beneficial interest in a flow-through entity for which an election was not made under section 813, add the taxpayer's share of the non-electing flow-through entity's positive business income as determined under section 817(2).
(5) In computing the tax due under this part, the taxpayer shall pay the tax due only on the business income tax base allocable to those members who are individuals, flow-through entities, estates, or trusts and exclude the business income tax base allocable to those members that are corporations, insurance companies, or financial institutions. The department may require the taxpayer to disclose identifying information for all members of the taxpayer and the allocable share of business income for each member.
(6) As used in this section:
(a) "Mineral" means that term as defined in section 2 of the nonferrous metallic minerals extraction severance tax act, 2012 PA 410, MCL 211.782.
(b) "Oil and gas" means oil and gas that is subject to severance tax under 1929 PA 48, MCL 205.301 to 205.317.
(c) "Qualified taxpayer" means a taxpayer subject to the minerals severance tax levied under the nonferrous metallic minerals extraction severance tax act, 2012 PA 410, MCL 211.781 to 211.791.
Enacting section 1. This amendatory act does not take effect unless Senate Bill No. 209 of the 103rd Legislature is enacted into law.
