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Unlocking Innovation: Michigan’s Proposed R&D Program

By February 12, 2024No Comments
Michigan State Capitol Building - DST Advisory Group

Path to Economic Growth Through Proposed Michigan R&D Program

A program years in the making, the House of Representatives recently passed a series of bills that would create a state Research & Development (R&D) program (5099-5102 and 4368). While the bills still need to pass the Senate House, there are high hopes that they will get pushed through due to the overwhelming bipartisan support. 

38 states across the United States already have their own R&D tax credit programs, including California, New York, Texas, Massachusetts, and Ohio. Therefore, Michigan is one of the few states that do not have its own R&D tax credit program. The bipartisan support for these bills signals a shared recognition of the importance of R&D in driving Michigan’s economic growth and competitiveness. It showcases the state’s commitment to fostering an environment that encourages businesses to invest in research and innovation, ultimately contributing to Michigan’s long-term prosperity.

The Highlights of the Bills

The bills do include some parameters regarding who qualifies and how much they can claim.

  • Taxpayers with 250 or more employees could claim up to $2.0 million.
  • Taxpayers with fewer than 250 employees could claim up to $250,000.
  • Taxpayers could claim up to $200,000 in additional credit for expenses from collaboration with a research university.
  • The aggregate amount of R&D credits could not exceed 100 million.

What does this mean for taxpayers in Michigan?

If the bill passes, the program will take effect on or after January 1st, 2024. This means that taxpayers in Michigan who qualify for the federal R&D Tax Credit will have an opportunity to apply for the Michigan State R&D Credit as well if passed. 

The potential impact of this R&D program on Michigan’s economic landscape is noteworthy. By offering a state R&D credit, the state aims to stimulate innovation, attract talent, and bolster its technological and scientific capabilities. This, in turn, could lead to the creation of high-quality jobs and the establishment of cutting-edge industries.

The recent passage of bills 5099-5102 and 4368 in the Michigan House of Representatives represents a significant leap forward in the state’s efforts to incentivize and promote research and development. If these bills successfully navigate the Senate House, Michigan taxpayers can look forward to a new era of opportunities, where investments in R&D are not only recognized but also rewarded, setting the stage for a more innovative and prosperous future.

DST Advisory Group is Here to Help

It is time for Michigan taxpayers to be proactive, engage with experts, and position themselves for success in this new era of incentivized research and development. As Michigan stands on the brink of implementing its groundbreaking R&D program, it is imperative for taxpayers to proactively prepare and capitalize on the potential benefits. Navigating the complexities of tax credits and incentives requires expertise. Working with your CPA and consulting firms, like DST Advisory Group, who have a deep understanding of the impending legislative changes can provide invaluable assistance in optimizing R&D credits for eligible businesses. Collaborating with professionals who specialize in R&D tax law and incentives ensures that taxpayers can maximize their claims within the confines of the new legislation. DST Advisory Group can help streamline the application process and help you take full advantage of the opportunities presented by Michigan’s commitment to fostering innovation.