2025 House Bill 4961 / Public Act 24

1. Amend page 22, line 29, by striking out “Through the 2025 tax year,” and inserting “For tax years that begin on and after January 1, 2026 and before January 1, 2029,”.

2. Amend page 23, line 4, by striking out “Through the 2025 tax year,” and inserting “For tax years that begin on and after January 1, 2026 and before January 1, 2029,”.

3. Amend page 23, line 8, after “liability.” by striking out the balance of the line through “year,” on line 9 and inserting “For tax years that begin on and after January 1, 2026 and before January 1, 2029,”.

1. Amend page 15, line 19, after “(i)” by striking out the balance of the subparagraph and inserting “Section 168(n) of the internal revenue code was not in effect.”.

2. Amend page 16, line 1, by striking out all of subdivision (gg) and inserting:

“(gg) For tax years beginning after December 31, 2024, to the extent deducted in determining

adjusted gross income and the deduction under section 174A of the internal revenue code on the taxpayer’s federal income tax return for the same tax year exceeds $1,000,000.00, add back an amount

equal to that excess.”.

3. Amend page 27, line 18, after “(i)” by striking out the balance of the subparagraph and inserting “Section 168(n) of the internal revenue code was not in effect.”.

4. Amend page 27, line 29, by striking out all of subdivision (i) and inserting:

“(i) For tax years beginning after December 31, 2024, to the extent deducted in determining federal taxable income and the deduction under section 174A of the internal revenue code on the taxpayer’s federal income tax return for the same tax year exceeds $1,000,000.00, add back an amount equal to

that excess.”.

5. Amend page 29, line 19, after “168(k)” by striking out the comma and “168(n), and 174A” and inserting “and 168(n)”.

6. Amend page 29, line 29, by striking out all of subdivision (c).

7. Amend page 33, following line 19, by inserting:

“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 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 after December 31, 2024, to the extent deducted in determining federal taxable income and the deduction under section 174A of the internal revenue code on the taxpayer’s federal income tax return for the same tax year exceeds $1,000,000.00, add back an amount equal to that excess.

(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 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.”.

8. Amend page 38, line 2, by striking out all of subdivision (a) and relettering the remaining subdivisions.

9. Amend page 38, line 10, after “(i)” by striking out the balance of the subparagraph and inserting “Section 168(n) of the internal revenue code was not in effect.”.

10. Amend page 39, following line 13, by inserting:

“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 after December 31, 2024, to the extent deducted in determining federal taxable income and the deduction under section 174A of the internal revenue code on the taxpayer’s federal income tax return for the same tax year exceeds $1,000,000.00, add back an amount equal to that excess.

(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 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.”.

1. Amend page 15, line 15, by striking out all of subdivisions (ff) and (gg).

2. Amend page 26, line 12, by removing section 36 from the bill.

3. Amend page 29, line 10, after “calculated” by striking out the balance of the subsection and inserting “as if section 168(k) and section 199 of the internal revenue code were not in effect.”.

4. Amend page 37, line 29, after “code” by striking out the balance of the page through “(c)” on line 21 of page 38 and inserting a period.

1. Amend page 15, line 21, after “168(k),” by striking out “174, and 179” and inserting “and 174”.

2. Amend page 27, line 20, after “168(k),” by striking out “174, and 179” and inserting “and 174”.

3. Amend page 29, line 21, after “163(j)” by striking out the comma and “174, and 179” and inserting “and 174”.

4. Amend page 38, line 12, after “168(k),” by striking out “174, and 179” and inserting “and 174”.

1. Amend page 15, line 15, after “2024” by inserting “and before January 1, 2028”.

2. Amend page 27, line 14, after “2024” by inserting “and before January 1, 2028”.

3. Amend page 29, line 12, after “2025” by inserting “and after December 31, 2027”.

4. Amend page 29, line 15, after “2024” by inserting “and before January 1, 2028”.

5. Amend page 38, line 7, after “2024” by inserting “and before January 1, 2028”.