Corporate income tax: revenue distribution; distribution of corporate income tax revenue; modify, the official text

Act No. 82

Public Acts of 2026

Approved by the Governor

July 21, 2026

Filed with the Secretary of State

July 27, 2026

EFFECTIVE
DATE: July 27, 2026

state of michigan

103rd Legislature

Regular session of 2026

Introduced by Reps. Outman, Hoadley, Bierlein, Thompson,
BeGole, Tisdel, Borton, Kelly, Johnsen, Cavitt, Woolford, Kuhn, Prestin, St.
Germaine, Frisbie, DeBoyer, Markkanen, Meerman, Roth, Jenkins-Arno, Bollin,
Alexander, Steele, Bruck, Lightner, Rigas, Kunse, Martin and VanderWall

ENROLLED HOUSE BILL No. 4187

AN ACT to amend 1967 PA 281,
entitled “An act to meet deficiencies in state funds by providing for the
imposition, levy, computation, collection, assessment, reporting, payment, and
enforcement by lien and otherwise of taxes on or measured by net income and on
certain commercial, business, and financial activities; to prescribe the manner
and time of making reports and paying the taxes, and the functions of public
officers and others as to the taxes; to permit the inspection of the records of
taxpayers; to provide for interest and penalties on unpaid taxes; to provide
exemptions, credits, rebates, and refunds of the taxes; to create certain
funds; to provide for the expenditure of certain funds; to impose certain
duties and requirements on certain officials, departments, and authorities of
this state; to prescribe penalties for the violation of this act; to provide an
appropriation; and to repeal acts and parts of acts,” by amending sections 51,
51g, and 696 (MCL 206.51, 206.51g, and 206.696), section 51 as amended and
section 696 as added by 2023 PA 4 and section 51g as added by 2018 PA 588.

The People of the State of
Michigan enact:

Sec.
51. (1) For receiving, earning, or otherwise acquiring income from any source
whatsoever, there is levied and imposed under this part upon the taxable income
of every person other than a corporation a tax at the following rates in the
following circumstances:

(a) On and after October 1, 2007 and before October 1, 2012,
4.35%.

(b) Except as otherwise provided under subdivision (c), on
and after October 1, 2012, 4.25%.

(c) For each tax year beginning on and after January 1, 2023,
if the percentage increase in the total general fund/general purpose revenue
from the immediately preceding fiscal year is greater than the inflation rate
for the same period and the inflation rate is positive, then the current rate
shall be reduced by an amount determined by multiplying that rate by a
fraction, the numerator of which is the difference between the total general
fund/general purpose revenue from the immediately preceding state fiscal year
and the capped general fund/general purpose revenue and the denominator of
which is the total revenue collected from this part in the immediately
preceding state fiscal year. For purposes of this subdivision only, the state
treasurer, the director of the senate fiscal agency, and the director of the
house fiscal agency shall determine whether the total revenue distributed to
general fund/general purpose revenue has increased as required under this
subdivision based on the comprehensive annual financial report prepared and
published by the department of technology, management, and budget in accordance
with section 23 of article IX of the state constitution of 1963. The state
treasurer, the director of the senate fiscal agency, and the director of the
house fiscal agency shall make the determination under this subdivision no
later than the date of the January 2023 revenue estimating conference conducted
pursuant to sections 367a through 367f of the management and budget act, 1984
PA 431, MCL 18.1367a to 18.1367f, and the date of each January revenue
estimating conference conducted each year thereafter. As used in this
subdivision:

(i) “Capped general fund/general purpose
revenue” means the total general fund/general purpose revenue from the
2020-2021 state fiscal year multiplied by the sum of 1 plus the product of
1.425 times the difference between a fraction, the numerator of which is the
Consumer Price Index for the state fiscal year ending in the tax year prior to
the tax year for which the adjustment is being made and the denominator of
which is the Consumer Price Index for the 2020-2021 state fiscal year, and 1.

(ii) “Total general fund/general purpose
revenue” means the total general fund/general purpose revenue and other
financing sources as published in the comprehensive annual financial report
schedule of revenue and other financing sources – general fund for that fiscal
year plus any distribution made pursuant to section 51d.

(2) For October 1, 2025 through September 30, 2026 only, that
percentage of the gross collections before refunds from the tax levied under
this section that is equal to 1.033% divided by the income tax rate levied
under this section shall be deposited in the state school aid fund created in
section 11 of article IX of the state constitution of 1963. Beginning October
1, 2026, that percentage of the gross collections before refunds from the tax
levied under this section that is equal to 1.040% divided by the income tax
rate levied under this section shall be deposited in the state school aid fund
created in section 11 of article IX of the state constitution of 1963.

(3) In addition to the distributions under subsections (2)
and (4) and sections 51e and 51f, from the revenue collected under this section
an amount equal to 3.5% of the average amount of farmland tax credits claimed
under section 36109 of the natural resources and environmental protection act,
1994 PA 451, MCL 324.36109, for the immediately preceding 3 state fiscal years
shall be deposited into the agricultural preservation fund created in section
36202 of the natural resources and environmental protection act, 1994 PA 451,
MCL 324.36202.

(4) In addition to the distributions under subsections (2)
and (3) and sections 51e and 51f, the following amounts of revenue collected
under this section must be deposited into the renew Michigan fund created in
section 51g each state fiscal year:

(a) For the 2026-2027 state fiscal year, $52,000,000.00.

(b) For the 2027-2028 and 2028-2029 state fiscal years,
$56,000,000.00.

(c) Beginning with the 2029-2030 state fiscal year and each
state fiscal year thereafter, $69,000,000.00.

(5) The department shall annualize rates provided in
subsection (1) as necessary. The applicable annualized rate must be imposed
upon the taxable income of every person other than a corporation for those tax
years.

(6) The taxable income of a nonresident must be computed in
the same manner that the taxable income of a resident is computed, subject to
the allocation and apportionment provisions of this part.

(7) A resident beneficiary of a trust whose taxable income
includes all or part of an accumulation distribution by a trust, as defined in
section 665 of the internal revenue code, is allowed a credit against the tax
otherwise due under this part. The credit must be all or a proportionate part
of any tax paid by the trust under this part for any preceding taxable year
that would not have been payable if the trust had in fact made distribution to
its beneficiaries at the times and in the amounts specified in section 666 of
the internal revenue code. The credit must not reduce the tax otherwise due
from the beneficiary to an amount less than would have been due if the
accumulation distribution were excluded from taxable income.

(8) The taxable income of a resident who is required to
include income from a trust in the resident’s federal income tax return under
the provisions of 26 USC 671 to 679, must include items of income and
deductions from the trust in taxable income to the extent required by this part
with respect to property owned outright.

(9) It is the intention of this section that the income
subject to tax of every person other than corporations must be computed in like
manner and be the same as provided in the internal revenue code subject to
adjustments specifically provided for in this part.

(10) As used in this section:

(a) “Consumer Price Index” means the United States Consumer
Price Index for all urban consumers as defined and reported by the United
States Department of Labor, Bureau of Labor Statistics.

(b) “Inflation rate” means the annual percentage change in
the Consumer Price Index, as determined by the department, comparing the 2 most
recent completed state fiscal years.

(c) “Person other than a corporation” means a resident or
nonresident individual or any of the following:

(i) A partner in a partnership as defined in
the internal revenue code.

(ii) A beneficiary of an estate or a trust as
defined in the internal revenue code.

(iii) An estate or trust as defined in the
internal revenue code.

(d) “Taxable income” means taxable income as defined in this
part subject to the applicable source and attribution rules contained in this
part.

Sec.
51g. (1) The renew Michigan fund is created within the state treasury. The
state treasurer may receive money or other assets from any source for deposit
into the renew Michigan fund. The state treasurer shall direct the investment
of the fund. The state treasurer shall credit to the fund interest and earnings
from fund investments.

(2) Money in the renew Michigan fund at the close of the
fiscal year shall remain in the fund and shall not lapse to the general fund.

(3) The department of environment, Great Lakes, and energy
shall be the administrator of the renew Michigan fund for auditing purposes.

(4) The department of environment, Great Lakes, and energy
shall expend money from the renew Michigan fund, upon appropriation, only for
the following purposes as follows:

(a) For the 2026-2027 state fiscal year through the 2028-2029
state fiscal year, 64% of the revenue, and for each state fiscal year after
2028-2029, 65% of the revenue, must be used for environmental protection,
cleanup, and redevelopment, including, but not limited to, addressing
contaminated sites and emerging issues that have known or suspected potential
to cause adverse environmental or human health effects and for brownfield
redevelopment. Criteria to determine which sites will be addressed each year may
include, but are not limited to, the following:

(i) Population risk, such as the number of
people exposed, whether sensitive populations are exposed, and whether the
exposure occurs in a residential setting.

(ii) Chemical risk, including the type and
concentration of chemicals and the public health risk associated with the
chemicals.

(iii) Economic development potential,
including the number of jobs, the amount of investment, or the amount of
increase in the property’s value.

(b) For the 2026-2027 state fiscal year through the 2028-2029
state fiscal year, 17% of the revenue, and for each state fiscal year after
2028-2029, 13% of the revenue, must be used for waste management, including,
but not limited to, oversight of active landfills, asbestos landfill gas
monitoring, addressing contamination, and department of environment, Great
Lakes, and energy expenditures for closure, postclosure monitoring or
maintenance, or corrective action for disposal areas that have been licensed
under this part.

(c) For the 2026-2027 state fiscal year through the 2028-2029
state fiscal year, 19% of the revenue, and for each state fiscal year after
2028-2029, 22% of the revenue, must be used for recycling, including, but not
limited to, the following:

(i) Materials management planning, including
grants to counties, regional planning agencies, municipalities, and other
entities responsible for preparing, implementing, and maintaining materials
management plans.

(ii) Local recycling programs, including
grants to local units of government and nonprofit and for-profit entities for
recycling infrastructure, local recycling outreach campaigns, and other costs
necessary to support increased recycling.

(iii) Market development, including grants to
local units of government and nonprofit and for-profit entities for purchasing
equipment, research and development, or associated activities to provide new or
increased use of recycled materials to support the development of recycling
markets.

(5) By December 31 annually, the department shall prepare and
submit to the senate and house appropriations committees a report detailing the
amount of revenue received by and expenditures from the renew Michigan fund
during the prior fiscal year and the fund balance at the end of the prior
fiscal year.

Sec.
696. (1) The revitalization and placemaking fund is created within the state
treasury. The state treasurer may receive money or other assets from any source
for deposit into the revitalization and placemaking fund. The state treasurer
shall direct the investment of the revitalization and placemaking fund. Except
as otherwise provided under this subsection, the state treasurer shall credit
to the revitalization and placemaking fund interest and earnings from fund
investments. Beginning with the 2026-2027 state fiscal year, all accrued
interest and earnings from fund investments must be credited to the general
fund.

(2) Money in the revitalization and placemaking fund at the
close of the fiscal year shall remain in the fund and shall not lapse to the
general fund.

(3) The Michigan strategic fund shall be the administrator of
the revitalization and placemaking fund for auditing purposes.

(4) Beginning with the 2022-2023 state fiscal year and each
state fiscal year thereafter, the Michigan strategic fund shall expend money
from the revitalization and placemaking fund, upon appropriation, only to
create and operate the revitalization and placemaking grants program to invest
in projects that enable population and tax revenue growth through
rehabilitation of vacant and blighted buildings and historic structures,
rehabilitation and development of vacant properties, and development of permanent
place-based infrastructure associated with social zones and traditional
downtowns, outdoor dining, and place-based public spaces. If grant funds are
used to support residential projects, those projects must comply with other
program guidelines and eligibility as determined by the Michigan strategic
fund.

(5) By December 31 annually, the Michigan strategic fund
shall prepare and submit to the senate and house appropriations committees a
report detailing the amount of revenue received by and expenditures from the
revitalization and placemaking fund during the prior state fiscal year and the
revitalization and placemaking fund balance at the end of the prior state
fiscal year.

This act is
ordered to take immediate effect.

Clerk of the House of
Representatives

Secretary of the Senate

Approved___________________________________________

____________________________________________________

Governor