LANSING, Mich. (Michigan News Source) – After discussing several bills regarding research and development tax credits since last August, they finally passed with bipartisan support in the House.
One of the main bill sponsors, Representative Greg VanWoerkom (R-Norton Shores), celebrated the passage of the bills.
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“This new program will help us keep good-paying jobs in Michigan and bring in many new opportunities in the career fields of the future,” he said. “This forward-thinking plan won’t just strengthen our local economy for today; it will also help create new jobs in our community for years to come.”
House Bills 4368 and 5099-5102 passed with bipartisan support and aim to incentivize businesses to come and work in the state.
“To be eligible for the credit, a business would have to propose to increase research and development spending in Michigan through projects with the potential for significant technological advancements, job creation, and positive economic impact,” according to a report on the bill package. “A business with at least 250 employees would have to propose to increase R&D spending by at least $500,000 per year above its base amount, and a business with fewer than 250 employees would have to propose an increase of at least $100,000 per year above its base amount.”
Similarly, the legislation defines what qualified research would not entail.
“Qualified research would not include research after commercial production, the adaptation or duplication of existing business components, surveys and studies, computer software (in most circumstances), foreign research, social sciences, or research funded by another person or entity,” according to the report. “It also would not include research relating to style, taste, cosmetic, or seasonal design factors.”
The bill package was also supported by House Minority Leader Matt Hall (R-Richland Township).
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“After weeks of the divided House Democrat caucus going it alone and hitting a dead end on their partisan agenda, Speaker Tate finally decided to work with Republicans, and we achieved a huge bipartisan win that will transform Michigan into the national leader in innovation and engineering,” Hall said in a statement. “This legislation originally called for an unfair, convoluted grant program at the whim of Gov. Whitmer’s political allies. Because of House Republican efforts, the final plan creates a fair, streamlined tax credit to incentivize businesses to invest in Michigan-based research. The new plan will not only help businesses launch new research projects and create high-paying careers, but thanks to House Republicans, it will also help keep ongoing research and development here in Michigan.”
Until the bills are signed by the Governor, Michigan remains one of 14 other states without a research and development tax credit. Furthermore, a House Fiscal Analysis report estimates that as written, the state revenue could decrease by $100 million annually for tax years beginning after Jan. 1, 2024- provided that the state hits the $100 million income tax credit threshold. Revenue loss would be diverted from the general fund.
The bill package will now proceed to the Michigan Senate for consideration.
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