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HB-4187, As Passed Senate, July 3, 2026
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SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4187
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
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 1
income from any source whatsoever, there is levied and imposed 2
under this part upon the taxable income of every person other than 3
a corporation a tax at the following rates in the following 4
circumstances: 5
(a) On and after October 1, 2007 and before October 1, 2012, 6
4.35%. 7
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(b) Except as otherwise provided under subdivision (c), on and 1
after October 1, 2012, 4.25%. 2
(c) For each tax year beginning on and after January 1, 2023, 3
if the percentage increase in the total general fund/general 4
purpose revenue from the immediately preceding fiscal year is 5
greater than the inflation rate for the same period and the 6
inflation rate is positive, then the current rate shall be reduced 7
by an amount determined by multiplying that rate by a fraction, the 8
numerator of which is the difference between the total general 9
fund/general purpose revenue from the immediately preceding state 10
fiscal year and the capped general fund/general purpose revenue and 11
the denominator of which is the total revenue collected from this 12
part in the immediately preceding state fiscal year. For purposes 13
of this subdivision only, the state treasurer, the director of the 14
senate fiscal agency, and the director of the house fiscal agency 15
shall determine whether the total revenue distributed to general 16
fund/general purpose revenue has increased as required under this 17
subdivision based on the comprehensive annual financial report 18
prepared and published by the department of technology, management, 19
and budget in accordance with section 23 of article IX of the state 20
constitution of 1963. The state treasurer, the director of the 21
senate fiscal agency, and the director of the house fiscal agency 22
shall make the determination under this subdivision no later than 23
the date of the January 2023 revenue estimating conference 24
conducted pursuant to sections 367a through 367f of the management 25
and budget act, 1984 PA 431, MCL 18.1367a to 18.1367f, and the date 26
of each January revenue estimating conference conducted each year 27
thereafter. As used in this subdivision: 28
(i) "Capped general fund/general purpose revenue" means the 29
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total general fund/general purpose revenue from the 2020-2021 state 1
fiscal year multiplied by the sum of 1 plus the product of 1.425 2
times the difference between a fraction, the numerator of which is 3
the Consumer Price Index for the state fiscal year ending in the 4
tax year prior to the tax year for which the adjustment is being 5
made and the denominator of which is the Consumer Price Index for 6
the 2020-2021 state fiscal year, and 1. 7
(ii) "Total general fund/general purpose revenue" means the 8
total general fund/general purpose revenue and other financing 9
sources as published in the comprehensive annual financial report 10
schedule of revenue and other financing sources – general fund for 11
that fiscal year plus any distribution made pursuant to section 12
51d. 13
(2) Except as otherwise provided for December 1, 2018 through 14
September 30, 2019, beginning January 1, 2000 through September 30, 15
2023, that percentage of the gross collections before refunds from 16
the tax levied under this section that is equal to 1.012% divided 17
by the income tax rate levied under this section shall be deposited 18
in the state school aid fund created in section 11 of article IX of 19
the state constitution of 1963. For December 1, 2018 through 20
September 30, 2019 only, that percentage of the gross collections 21
before refunds from the tax levied under this section that is equal 22
to 0.954% divided by the income tax rate levied under this section 23
shall be deposited in the state school aid fund created in section 24
11 of article IX of the state constitution of 1963. For October 1, 25
2023 through September 30, 2024 only, that percentage of the gross 26
collections before refunds from the tax levied under this section 27
that is equal to 1.015% divided by the income tax rate levied under 28
this section shall be deposited in the state school aid fund 29
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created in section 11 of article IX of the state constitution of 1
1963. For October 1, 2024 through September 30, 2025 only, that 2
percentage of the gross collections before refunds from the tax 3
levied under this section that is equal to 1.023% divided by the 4
income tax rate levied under this section shall be deposited in the 5
state school aid fund created in section 11 of article IX of the 6
state constitution of 1963. For October 1, 2025 through September 7
30, 2026 only, that percentage of the gross collections before 8
refunds from the tax levied under this section that is equal to 9
1.033% divided by the income tax rate levied under this section 10
shall be deposited in the state school aid fund created in section 11
11 of article IX of the state constitution of 1963. Beginning 12
October 1, 2026, that percentage of the gross collections before 13
refunds from the tax levied under this section that is equal to 14
1.040% divided by the income tax rate levied under this section 15
shall be deposited in the state school aid fund created in section 16
11 of article IX of the state constitution of 1963. 17
(3) In addition to the distributions under subsections (2) and 18
(4) and sections 51d, 51e , and 51f, beginning October 1, 2016, 19
from the revenue collected under this section an amount equal to 20
3.5% of the average amount of farmland tax credits claimed under 21
section 36109 of the natural resources and environmental protection 22
act, 1994 PA 451, MCL 324.36109, for the immediately preceding 3 23
state fiscal years shall be deposited into the agricultural 24
preservation fund created in section 36202 of the natural resources 25
and environmental protection act, 1994 PA 451, MCL 324.36202. 26
(4) In addition to the distributions under subsections (2) and 27
(3) and sections 51d, 51e , and 51f, and subject to the limitation 28
under this subsection, beginning with the 2018-2019 state fiscal 29
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year and each fiscal year thereafter, from the following amounts of 1
revenue collected under this section $69,000,000.00 shall must be 2
deposited into the renew Michigan fund created in section 51g each 3
state fiscal year: . However, if, in any 1 of the 2018-2019 through 4
the 2021-2022 state fiscal years, the minimum foundation allowance 5
falls below the 2017-2018 minimum foundation allowance established 6
under section 20 of the state school aid act of 1979, 1979 PA 94, 7
MCL 388.1620, as amended by 2017 PA 108, then no money shall be 8
deposited into the renew Michigan fund pursuant to this subsection 9
for that fiscal year. 10
(a) For the 2026-2027 state fiscal year, $52,000,000.00. 11
(b) For the 2027-2028 and 2028-2029 state fiscal years, 12
$56,000,000.00. 13
(c) Beginning with the 2029-2030 state fiscal year and each 14
state fiscal year thereafter, $69,000,000.00. 15
(5) The department shall annualize rates provided in 16
subsection (1) as necessary. The applicable annualized rate shall 17
must be imposed upon the taxable income of every person other than 18
a corporation for those tax years. 19
(6) The taxable income of a nonresident shall must be computed 20
in the same manner that the taxable income of a resident is 21
computed, subject to the allocation and apportionment provisions of 22
this part. 23
(7) A resident beneficiary of a trust whose taxable income 24
includes all or part of an accumulation distribution by a trust, as 25
defined in section 665 of the internal revenue code, shall be is 26
allowed a credit against the tax otherwise due under this part. The 27
credit shall must be all or a proportionate part of any tax paid by 28
the trust under this part for any preceding taxable year that would 29
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not have been payable if the trust had in fact made distribution to 1
its beneficiaries at the times and in the amounts specified in 2
section 666 of the internal revenue code. The credit shall must not 3
reduce the tax otherwise due from the beneficiary to an amount less 4
than would have been due if the accumulation distribution were 5
excluded from taxable income. 6
(8) The taxable income of a resident who is required to 7
include income from a trust in the resident's federal income tax 8
return under the provisions of 26 USC 671 to 679, shall must 9
include items of income and deductions from the trust in taxable 10
income to the extent required by this part with respect to property 11
owned outright. 12
(9) It is the intention of this section that the income 13
subject to tax of every person other than corporations shall must 14
be computed in like manner and be the same as provided in the 15
internal revenue code subject to adjustments specifically provided 16
for in this part. 17
(10) As used in this section: 18
(a) "Consumer Price Index" means the United States Consumer 19
Price Index for all urban consumers as defined and reported by the 20
United States Department of Labor, Bureau of Labor Statistics. 21
(b) "Inflation rate" means the annual percentage change in the 22
Consumer Price Index, as determined by the department, comparing 23
the 2 most recent completed state fiscal years. 24
(c) "Person other than a corporation" means a resident or 25
nonresident individual or any of the following: 26
(i) A partner in a partnership as defined in the internal 27
revenue code. 28
(ii) A beneficiary of an estate or a trust as defined in the 29
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internal revenue code. 1
(iii) An estate or trust as defined in the internal revenue 2
code. 3
(d) "Taxable income" means taxable income as defined in this 4
part subject to the applicable source and attribution rules 5
contained in this part. 6
Sec. 51g. (1) The renew Michigan fund is created within the 7
state treasury. The state treasurer may receive money or other 8
assets from any source for deposit into the renew Michigan fund. 9
The state treasurer shall direct the investment of the fund. The 10
state treasurer shall credit to the fund interest and earnings from 11
fund investments. 12
(2) Money in the renew Michigan fund at the close of the 13
fiscal year shall remain in the fund and shall not lapse to the 14
general fund. 15
(3) The department of environmental quality environment, Great 16
Lakes, and energy shall be the administrator of the renew Michigan 17
fund for auditing purposes. 18
(4) Beginning with the 2018-2019 state fiscal year and each 19
fiscal year thereafter, the The department of environment, Great 20
Lakes, and energy shall expend money from the renew Michigan fund, 21
upon appropriation, only for the following purposes as follows: 22
(a) For the 2026-2027 state fiscal year through the 2028-2029 23
state fiscal year, 64% of the revenue, and for each state fiscal 24
year after 2028-2029, 65% of the revenue, shall must be used for 25
environmental protection, cleanup, and redevelopment, including, 26
but not limited to, addressing contaminated sites and emerging 27
issues that have known or suspected potential to cause adverse 28
environmental or human health effects and for brownfield 29
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redevelopment. Criteria to determine which sites will be addressed 1
each year may include, but are not limited to, the following: 2
(i) Population risk, such as the number of people exposed, 3
whether sensitive populations are exposed, and whether the exposure 4
occurs in a residential setting. 5
(ii) Chemical risk, including the type and concentration of 6
chemicals and the public health risk associated with the chemicals. 7
(iii) Economic development potential, including the number of 8
jobs, the amount of investment, or the amount of increase in the 9
property's value. 10
(b) For the 2026-2027 state fiscal year through the 2028-2029 11
state fiscal year, 17% of the revenue, and for each state fiscal 12
year after 2028-2029, 13% of the revenue, shall must be used for 13
waste management, including, but not limited to, oversight of 14
active landfills, asbestos landfill gas monitoring, addressing 15
contamination, and department of environmental quality environment, 16
Great Lakes, and energy expenditures for closure, postclosure 17
monitoring or maintenance, or corrective action for disposal areas 18
that have been licensed under this part. 19
(c) For the 2026-2027 state fiscal year through the 2028-2029 20
state fiscal year, 19% of the revenue, and for each state fiscal 21
year after 2028-2029, 22% of the revenue, shall must be used for 22
recycling, including, but not limited to, the following: 23
(i) Materials management planning, including grants to 24
counties, regional planning agencies, municipalities, and other 25
entities responsible for preparing, implementing, and maintaining 26
materials management plans. 27
(ii) Local recycling programs, including grants to local units 28
of government and nonprofit and for-profit entities for recycling 29
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infrastructure, local recycling outreach campaigns, and other costs 1
necessary to support increased recycling. 2
(iii) Market development, including grants to local units of 3
government and nonprofit and for-profit entities for purchasing 4
equipment, research and development, or associated activities to 5
provide new or increased use of recycled materials to support the 6
development of recycling markets. 7
(5) By December 31 annually, the department shall prepare and 8
submit to the senate and house appropriations committees a report 9
detailing the amount of revenue received by and expenditures from 10
the renew Michigan fund during the prior fiscal year and the fund 11
balance at the end of the prior fiscal year. 12
Sec. 696. (1) The revitalization and placemaking fund is 13
created within the state treasury. The state treasurer may receive 14
money or other assets from any source for deposit into the 15
revitalization and placemaking fund. The state treasurer shall 16
direct the investment of the revitalization and placemaking fund. 17
The Except as otherwise provided under this subsection, the state 18
treasurer shall credit to the revitalization and placemaking fund 19
interest and earnings from fund investments. Beginning with the 20
2026-2027 state fiscal year, all accrued interest and earnings from 21
fund investments must be credited to the general fund. 22
(2) Money in the revitalization and placemaking fund at the 23
close of the fiscal year shall remain in the fund and shall not 24
lapse to the general fund. 25
(3) The Michigan strategic fund shall be the administrator of 26
the revitalization and placemaking fund for auditing purposes. 27
(4) Beginning with the 2022-2023 state fiscal year and each 28
state fiscal year thereafter, the Michigan strategic fund shall 29
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expend money from the revitalization and placemaking fund, upon 1
appropriation, only to create and operate the revitalization and 2
placemaking grants program to invest in projects that enable 3
population and tax revenue growth through rehabilitation of vacant 4
and blighted buildings and historic structures, rehabilitation and 5
development of vacant properties, and development of permanent 6
place-based infrastructure associated with social zones and 7
traditional downtowns, outdoor dining, and place-based public 8
spaces. If grant funds are used to support residential projects, 9
those projects must comply with other program guidelines and 10
eligibility as determined by the Michigan strategic fund. 11
(5) By December 31 annually, the Michigan strategic fund shall 12
prepare and submit to the senate and house appropriations 13
committees a report detailing the amount of revenue received by and 14
expenditures from the revitalization and placemaking fund during 15
the prior state fiscal year and the revitalization and placemaking 16
fund balance at the end of the prior state fiscal year. 17