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Act No. 24
Public Acts of 2025
Approved by the Governor
October 7, 2025
Filed with the Secretary of State
October 7, 2025
EFFECTIVE DATE: October 7, 2025
STATE OF MICHIGAN
103RD LEGISLATURE
REGULAR SESSION OF 2025
Introduced by Rep. Bollin
ENROLLED HOUSE BILL No. 4961
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 p rovide an appropriation; and to
repeal acts and parts of acts, ” by amending sections 12, 30, 36, 607, 695, and 805 (MCL 206.12, 206.30, 206.36,
206.607, 206.695, and 206.805), sections 12, 607, and 805 as amended by 2024 PA 177, sections 30 and 695 as
amended by 2023 PA 4, and section 36 as amended by 2011 PA 38; and to repeal acts and parts of acts.
The People of the State of Michigan enact:
Sec. 12. (1) “Flow-through entity” means an S corporation, partnership, limited partnership, limited liability
partnership, or limited liability company. Flow -through entity does not include a publicly traded partnership as
that term is defined in section 7704 of the internal revenue code that has equity securities registered with the
securities and exchange commission under section 12 of title I of the securities exchange act of 1934, 15 USC 78l,
or a person treated as a corporation under section 339.
(2) “Gross income” means gross income as defined in the internal revenue code.
(3) “Internal revenue code” means the United States internal revenue code of 1986 in effect on January 1, 2025
or at the option of the taxpayer, in effect for the tax year.
(4) “Member of a flow-through entity” means a shareholder of an S corporation; a partner in a partnership or
limited partnership; or a member of a limited liability company.
(5) “Nonresident member” means any of the following that is a member of a flow-through entity:
(a) An individual who is not domiciled in this state.
(b) A nonresident estate or trust.
(c) A flow-through entity with a nonresident member.
Sec. 30. (1) “Taxable income” means, for a person other than a corporation, estate, or trust, adjusted gross
income as defined in the internal revenue code subject to the following adjustments under this section:
(a) Add gross interest income and dividends derived from obligations or securities of states other than
Michigan, in the same amount that has been excluded from adjusted gross income less related expenses not
deducted in computing adjusted gross income because of section 265(a)(1) of the internal revenue code.
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(b) Add taxes on or measured by income to the extent the taxes have been deducted in arriving at adjusted
gross income including any direct or indirect allocated share of taxes paid by a flow-through entity under part 4.
(c) 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 adjusted gross income.
(d) Deduct, to the extent included in adjusted gross 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 adjusted gross income.
(e) Deduct, to the extent included in adjusted gross income, the following:
(i) Compensation, including retirement or pension benefits, received for services in the Armed Forces of the
United States.
(ii) Retirement or pension benefits under the railroad retirement act of 1974, 45 USC 231 to 231v.
(iii) Retirement or pension benefits received for services in the Michigan National Guard.
(f) Deduct the following to the extent included in adjusted gross income subject to the limitations and
restrictions set forth in subsection (9), (10), or (11), as applicable:
(i) Retirement or pension benefits received from a federal public retirement system or from a public retirement
system of or created by this state or a political subdivision of this state.
(ii) Retirement or pension benefits received from a public retirement system of or created by another state or
any of its political subdivisions if the income tax laws of the other state permit a similar deduction or exemption
or a reciprocal deduction or exemption of a retirement or pension benefit received from a public retirement system
of or created by this state or any of the political subdivisions of this state.
(iii) Social Security benefits as defined in section 86 of the internal revenue code.
(iv) Beginning on and after January 1, 2007, retirement or pension benefits not deductible under
subparagraph (i) or subdivision (e) from any other retirement or pension system or benefits from a retirement
annuity policy in which payments are made for life to a senior citizen, to a maximum of $42,240.00 for a single
return and $84,480.00 for a joint return. The max imum amounts allowed under this subparagraph shall be
reduced by the amount of the deduction for retirement or pension benefits claimed under su bparagraph (i) or
subdivision (e) and by the amount of a deduction claimed under subdivision (p). For the 2008 tax year and each
tax year after 2008, the maximum amounts allowed under this subparagraph shall be adjusted by the percentage
increase in the United States Consumer Price Index for the immediately preceding calendar year. The department
shall annualize the amounts provided in this subparagraph as necessary.
(v) The amount determined to be the section 22 amount eligible for the elderly and the permanently and totally
disabled credit provided in section 22 of the internal revenue code.
(g) Adjustments resulting from the application of section 271.
(h) Adjustments with respect to estate and trust income as provided in section 36.
(i) Adjustments resulting from the allocation and apportionment provisions of chapter 3.
(j) Deduct the following payments made by the taxpayer in the tax year:
(i) The amount of a charitable contribution made to the advance tuition payment fund created under section 9
of the Michigan education trust act, 1986 PA 316, MCL 390.1429.
(ii) The amount of payment made under an advance tuition payment contract as provided in the Michigan
education trust act, 1986 PA 316, MCL 390.1421 to 390.1442.
(iii) The amount of payment made under a contract with a private sector investment manager that meets all
of the following criteria:
(A) The contract is certified and approved by the board of directors of the Michigan education trust to provide
equivalent benefits and rights to purchasers and beneficiaries as an advance tuition payment contract as
described in subparagraph (ii).
(B) The contract applies only for a state institution of higher education as defined in the Michigan education
trust act, 1986 PA 316, MCL 390.1421 to 390.1442, or a community or junior college in Michigan.
(C) The contract provides for enrollment by the contract ’s qualified beneficiary in not less than 4 years after
the date on which the contract is entered into.
(D) The contract is entered into after either of the following:
(I) The purchaser has had the purchaser’s offer to enter into an advance tuition payment contract rejected by
the board of directors of the Michigan education trust, if the board determines that the trust cannot accept an
unlimited number of enrollees upon an actuarially sound basis.
(II) The board of directors of the Michigan education trust determines that the trust can accept an unlimited
number of enrollees upon an actuarially sound basis.
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(k) If an advance tuition payment contract under the Michigan education trust act, 1986 PA 316,
MCL 390.1421 to 390.1442, or another contract for which the payment was deductible under subdivision (j) is
terminated and the qualified beneficiary under that contract does not attend a university, college, junior or
community college, or other institution of higher education, add the amount of a refund received by the taxpayer
as a result of that termination or the amount of the deduction taken under subdivision (j) for payment made under
that contract, whichever is less.
(l) Deduct from the taxable income of a purchaser the amount included as income to the purchaser under the
internal revenue code after the advance tuition payment contract entered into under the Michigan education trust
act, 1986 PA 316, MCL 390.1421 to 390. 1442, is terminated because the qualified beneficiary attends an
institution of postsecondary education other than either a state institution of higher education or an institution
of postsecondary education located outside this state with which a state i nstitution of higher education has
reciprocity.
(m) Add, to the extent deducted in determining adjusted gross income, the net operating loss deduction under
section 172 of the internal revenue code.
(n) Deduct a net operating loss deduction for the taxable year as determined under section 172 of the internal
revenue code subject to the modifications under section 172(b)(2) of the internal revenue code and subject to the
allocation and apportionment provisions of chapter 3 for the taxable year in which the loss was incurred.
(o) Deduct, to the extent included in adjusted gross income, benefits from a discriminatory self -insurance
medical expense reimbursement plan.
(p) Beginning on and after January 1, 2007, subject to any limitation provided in this subdivision, a taxpayer
who is a senior citizen may deduct to the extent included in adjusted gross income, interest, dividends, and capital
gains received in the tax year not to exceed $9,420.00 for a single return and $ 18,840.00 for a joint return. The
maximum amounts allowed under this subdivision shall be reduced by the amount of a deduction claimed for
retirement or pension benefits under subdivision (e) or a deducti on claimed under subdivision (f)( i), (ii), (iv), or
(v). For the 2008 tax year and each tax year after 2008, the maximum amounts allowed under this subdivision
shall be adjusted by the percentage increase in the United States Consumer Price Index for the immediately
preceding calendar year. The department shall annualize the amounts provided in this subdivision as necessary.
The deduction under this subdivision is not available to a senior citizen born after 1945.
(q) Deduct, to the extent included in adjusted gross income, all of the following:
(i) The amount of a refund received in the tax year based on taxes paid under this part and any direct or
indirect allocated share of a refund received by a flow-through entity under part 4.
(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.
(iii) The amount of a credit received in the tax year based on a claim filed under sections 520 and 522 to the
extent that the taxes used to calculate the credit were not used to reduce adjusted gross income for a prior year.
(r) Add the amount paid by the state on behalf of the taxpayer in the tax year to repay the outstanding principal
on a loan taken on which the taxpayer defaulted that was to fund an advance tuition payment contract entered
into under the Michigan education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, if the cost of the advance
tuition payment contract was deducted under subdivision (j) and was financed with a Michigan education trust
secured loan.
(s) Deduct, to the extent included in adjusted gross income, any amount, and any interest earned on that
amount, received in the tax year by a taxpayer who is a Holocaust victim as a result of a settlement of claims
against any entity or individual for any recovered asset pursuant to the German act regulating unresolved
property claims, also known as Gesetz zur Regelung offener Vermogensfragen, as a result of the settlement of the
action entitled In re: Holocaust victim assets litigation , CV-96-4849, CV-96-5161, and CV-97-0461 (E.D. NY), or
as a result of any similar action if the income and interest are not commingled in any way with and are kept
separate from all other funds and assets of the taxpayer. As used in this subdivision:
(i) “Holocaust victim ” means a person, or the heir or beneficiary of that person, who was persecuted by
Nazi Germany or any Axis regime during any period from 1933 to 1945.
(ii) “Recovered asset” means any asset of any type and any interest earned on that asset, including, but not
limited to, bank deposits, insurance proceeds, or artwork owned by a Holocaust victim during the period from
1920 to 1945, withheld from that Holocaust victim from and after 1945, and not recovered, returned, or otherwise
compensated to the Holocaust victim until after 1993.
(t) Deduct all of the following:
(i) To the extent not deducted in determining adjusted gross income, contributions made by the taxpayer in
the tax year less qualified withdrawals made in the tax year from education savings accounts, calculated on a per
education savings account basis, pursuant to the Michigan education savings program act, 2000 PA 161,
MCL 390.1471 to 390.1486, not to exceed a total deduction of $5,000.00 for a single return or $10,000.00 for a joint
return per tax year. The amount calculated under this subparagraph for each education savings account shall not
be less than zero.
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(ii) To the extent included in adjusted gross income, interest earned in the tax year on the contributions to the
taxpayer’s education savings accounts if the contributions were deductible under subparagraph (i).
(iii) To the extent included in adjusted gross income, distributions that are qualified withdrawals from an
education savings account to the designated beneficiary of that education savings account.
(u) Add, to the extent not included in adjusted gross income, the amount of money withdrawn by the taxpayer
in the tax year from education savings accounts, not to exceed the total amount deducted under subdivision (t) in
the tax year and all previous tax years, if the withdrawal was not a qualified withdrawal as provided in the
Michigan education savings program act, 2000 PA 161, MCL 390.1471 to 390.1486. This subdivision does not
apply to withdrawals that are less than the sum of all contributions made to an education savings account in all
previous tax years for which no deduction was claimed under subdivision (t), less any contributions for which no
deduction was claimed under subdivision (t) that were withdrawn in all previous tax years.
(v) A taxpayer who is a resident tribal member may deduct, to the extent included in adjusted gross income,
all nonbusiness income earned or received in the tax year and during the period in which an agreement entered
into between the taxpayer’s tribe and this state pursuant to section 30c of 1941 PA 122, MCL 205.30c, is in full
force and effect. As used in this subdivision:
(i) “Business income” means business income as defined in section 4 and apportioned under chapter 3.
(ii) “Nonbusiness income” means nonbusiness income as defined in section 14 and, to the extent not included
in business income, all of the following:
(A) All income derived from wages whether the wages are earned within the agreement area or outside of the
agreement area.
(B) All interest and passive dividends.
(C) All rents and royalties derived from real property located within the agreement area.
(D) All rents and royalties derived from tangible personal property, to the extent the personal property is
utilized within the agreement area.
(E) Capital gains from the sale or exchange of real property located within the agreement area.
(F) Capital gains from the sale or exchange of tangible personal property located within the agreement area
at the time of sale.
(G) Capital gains from the sale or exchange of intangible personal property.
(H) All pension income and benefits, including, but not limited to, distributions from a 401(k) plan, individual
retirement accounts under section 408 of the internal revenue code, or a defined contribution plan, or payments
from a defined benefit plan.
(I) All per capita payments by the tribe to resident tribal members, without regard to the source of payment.
(J) All gaming winnings.
(iii) “Resident tribal member” means an individual who meets all of the following criteria:
(A) Is an enrolled member of a federally recognized tribe.
(B) The individual ’s tribe has an agreement with this state pursuant to section 30c of 1941 PA 122,
MCL 205.30c, that is in full force and effect.
(C) The individual ’s principal place of residence is located within the agreement area as designated in the
agreement under sub-subparagraph (B).
(w) Eliminate all of the following:
(i) Income from producing oil and gas to the extent included in adjusted gross income.
(ii) Expenses of producing oil and gas to the extent deducted in arriving at adjusted gross income.
(x) Deduct all of the following:
(i) To the extent not deducted in determining adjusted gross income, contributions made by the taxpayer in
the tax year less qualified withdrawals made in the tax year from an ABLE savings account, pursuant to the
Michigan achieving a better life experience (ABLE) program act, 2015 PA 160, MCL 206.981 to 206.997, not to
exceed a total deduction of $5,000.00 for a single return or $10,000.00 for a joint return per tax year. The amount
calculated under this subparagraph for an ABLE savings account shall not be less than zero.
(ii) To the extent included in adjusted gross income, interest earned in the tax year on the contributions to the
taxpayer’s ABLE savings account if the contributions were deductible under subparagraph (i).
(iii) To the extent included in adjusted gross income, distributions that are qualified withdrawals from an
ABLE savings account to the designated beneficiary of that ABLE savings account.
(y) Add, to the extent not included in adjusted gross income, the amount of money withdrawn by the taxpayer
in the tax year from an ABLE savings account, not to exceed the total amount deducted under subdivision (x) in
the tax year and all previous tax yea rs, if the withdrawal was not a qualified withdrawal as provided in the
Michigan achieving a better life experience (ABLE) program act, 2015 PA 160, MCL 206.981 to 206.997. This
subdivision does not apply to withdrawals that are less than the sum of all contributions made to an ABLE savings
account in all previous tax years for which no deduction was claimed under subdivision (x), less any contributions
for which no deduction was claimed under subdivision (x) that were withdrawn in all previous tax years.
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(z) Deduct, to the extent included in adjusted gross income, compensation received in the tax year pursuant to
the wrongful imprisonment compensation act, 2016 PA 343, MCL 691.1751 to 691.1757.
(aa) For tax years that begin on and after January 1, 2025, a taxpayer who is a disabled veteran may deduct,
to the extent included in adjusted gross income, income reported on a federal income tax form 1099 -C that is
attributable to the cancellation or di scharge of a student loan by the United States Department of Education
pursuant to the total and permanent disability discharge program, 34 CFR 685.213. As used in this subdivision,
“disabled veteran” means an individual who meets either of the following criteria:
(i) Has been determined by the United States Department of Veterans Affairs to be permanently and totally
disabled as a result of military service and entitled to veterans’ benefits at the 100% rate.
(ii) Has been rated by the United States Department of Veterans Affairs as individually unemployable.
(bb) For tax years that begin on and after January 1, 2021, and subject to the limitation under this subdivision,
deduct, to the extent not deducted in determining adjusted gross income, wagering losses deducted under section
165(d) of the internal revenue code on the taxpayer ’s federal income tax return for the same tax year. For a
nonresident, only wagering losses that are attributable to wagering transactions placed at or through a casino or
licensed race meeting located in this state may be deducted and must not exceed the gains on wagering
transactions allocated to this state under section 110(2)(d). As used in this subdivision, “casino” and “licensed race
meeting” mean those terms as defined in section 110.
(cc) Except as otherwise provided under subparagraph ( i), for tax years that begin on and after January 1,
2022, deduct all of the following:
(i) To the extent not deducted in determining adjusted gross income, contributions made by the taxpayer in
the tax year less qualified withdrawals made in the tax year from a first -time home buyer savings account,
pursuant to the Michigan first-time home buyer savings program act, 2022 PA 6, MCL 565.1001 to 565.1013, not
to exceed a total deduction of $5,000.00 for a single return or $10,000.00 for a joint return per tax year. The
amount calculated under this subparagraph for a first -time home buyer savings account shall not be less than
zero. The deduction under this subparagraph does not apply for tax years that begin after December 31, 2026.
(ii) To the extent not deducted in determining adjusted gross income, interest earned in the tax year on the
contributions to the taxpayer’s first-time home buyer savings account.
(iii) To the extent included in adjusted gross income, distributions that are qualified withdrawals from a first-
time home buyer savings account to the qualified beneficiary of that savings account.
(dd) For tax years that begin on and after January 1, 2022, add, to the extent not included in adjusted gross
income, the amount of money withdrawn by the taxpayer in the tax year from a first -time home buyer savings
account, not to exceed the total amount deducted under subdivision (cc) in the tax year and all previous tax years,
if the withdrawal was not a qualified withdrawal as provided in the Michigan first -time home buyer savings
program act, 2022 PA 6, MCL 565.1001 to 565.1013. This subdivision does not apply to withdrawals that are less
than the sum of all contributions made to a first -time home buyer savings account in all previous tax years for
which no deduction was claimed under subdivision (cc), less any contributions for which no deduction was claimed
under subdivision (cc) that were withdrawn in all previous tax years.
(ee) Subject to the limitations under this subdivision, for tax years beginning after December 31, 2025 and
before January 1, 2029, deduct, to the extent not deducted in determining adjusted gross income, an amount equal
to the sum of the following deducti ons allowed to be claimed on the taxpayer ’s federal income tax return for the
same tax year:
(i) Qualified tips under section 224 of the internal revenue code. For a nonresident, only qualified tips that are
attributable to services performed in this state may be deducted.
(ii) Qualified overtime compensation under section 225 of the internal revenue code. For a nonresident, only
qualified overtime compensation that is attributable to services performed in this state may be deducted.
(ff) For tax years beginning after December 31, 2024, adjusted gross income must be calculated as if both of
the following conditions applied, subject to any necessary adjustments under subparagraph (iii):
(i) Sections 168(n) and 174A of the internal revenue code were not in effect.
(ii) Sections 163(j), 168(k), 174, and 179 of the internal revenue code applied as those provisions were in effect
on December 31, 2024.
(iii) The state treasurer shall, if necessary, modify the application of any references in the internal revenue
code to the sections identified in subparagraphs (i) and (ii) in a reasonable manner to carry out the purpose of this
subdivision, including, but not limited to, modifying the application of section references that were amended under
Public Law 119-21.
(gg) For tax years beginning after December 31, 2021, adjusted gross income must be calculated as if the
transition rules under section 70302 of Public Law 119-21, including, but not limited to, any provisions related to
the application of section 174A of the internal revenue code, do not apply.
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(2) Except as otherwise provided in subsection (7), and section 30a, a personal exemption of $3,700.00
multiplied by the number of personal and dependency exemptions shall be subtracted in the calculation that
determines taxable income. The number of personal and dependency exemptions allowed shall be determined as
follows:
(a) Each taxpayer may claim 1 personal exemption. However, if a joint return is not made by the taxpayer and
the taxpayer’s spouse, the taxpayer may claim a personal exemption for the spouse if the spouse, for the calendar
year in which the taxable year of the taxpayer begins, does not have any gross income and is not the dependent
of another taxpayer.
(b) A taxpayer may claim a dependency exemption for each individual who is a dependent of the taxpayer for
the tax year.
(c) A taxpayer may claim an additional exemption under this subsection in the tax year for which the taxpayer
has a certificate of stillbirth from the department of health and human services as provided under section 2834
of the public health code, 1978 PA 368, MCL 333.2834.
(3) Except as otherwise provided in subsection (7), a single additional exemption determined as follows shall
be subtracted in the calculation that determines taxable income in each of the following circumstances:
(a) $1,800.00 for each taxpayer and every dependent of the taxpayer who is a deaf person as defined in section 2
of the deaf persons’ interpreters act, 1982 PA 204, MCL 393.502; a paraplegic, a quadriplegic, or a hemiplegic; a
person who is blind as defined in section 504; or a person who is totally and permanently disabled as defined in
section 522. When a dependent of a taxpayer files an annual return under this part, the taxpayer or dependent of
the taxpayer, but not both, may claim the additional exemption allowed under this subdivision.
(b) For tax years beginning after 2007, $250.00 for each taxpayer and every dependent of the taxpayer who is
a qualified disabled veteran. When a dependent of a taxpayer files an annual return under this part, the taxpayer
or dependent of the taxpayer, but not both, may claim the additional exem ption allowed under this subdivision.
As used in this subdivision:
(i) “Qualified disabled veteran” means a veteran with a service-connected disability.
(ii) “Service-connected disability” means a disability incurred or aggravated in the line of duty in the active
military, naval, or air service as described in 38 USC 101(16).
(iii) “Veteran” means an individual who served in the active military, naval, marine, coast guard, or air service
and who was discharged or released from the individual’s service with an honorable or general discharge.
(4) An individual with respect to whom a deduction under subsection (2) is allowable to another taxpayer
during the tax year is not entitled to an exemption for purposes of subsection (2), but may subtract $1,500.00 in
the calculation that determines taxable income for a tax year.
(5) A nonresident or a part-year resident is allowed that proportion of an exemption or deduction allowed under
subsection (2), (3), or (4) that the taxpayer’s portion of adjusted gross income from Michigan sources bears to the
taxpayer’s total adjusted gross income.
(6) In calculating taxable income, a taxpayer shall not subtract from adjusted gross income the amount of
prizes won by the taxpayer under the McCauley -Traxler-Law-Bowman-McNeely lottery act, 1972 PA 239,
MCL 432.1 to 432.47.
(7) For each tax year beginning on and after January 1, 2013, the personal exemption allowed under
subsection (2) shall be adjusted by multiplying the exemption for the tax year beginning in 2012 by a fraction, the
numerator of which is the United States Consumer Price Index for the state fiscal year ending in the tax year
prior to the tax year for which the adjus tment is being made and the denominator of which is the United States
Consumer Price Index for the 2010-2011 state fiscal year. For the 2022 tax year and each tax year after 2022, the
adjusted amount determined under this subsection shall be increased by an additional $600.00. The resultant
product shall be rounded to the nearest $100.00 increment. For each tax year, the exemptions allowed under
subsection (3) shall be adjusted by multiplying the exemption amount under subsection (3) for the tax year by a
fraction, the numerator of which is the United States Consumer Price Index for the state fiscal year ending the
tax year prior to the tax year for which the adjustment is being made and the denominator of which is the
United States Consumer Price Index for the 1998 -1999 state fiscal year. The resultant product shall be rounded
to the nearest $100.00 increment.
(8) As used in this section, “retirement or pension benefits” means distributions from all of the following:
(a) Except as provided in subdivision (d), qualified pension trusts and annuity plans that qualify under
section 401(a) of the internal revenue code, including all of the following:
(i) Plans for self-employed persons, commonly known as Keogh or HR10 plans.
(ii) Individual retirement accounts that qualify under section 408 of the internal revenue code if the
distributions are not made until the participant has reached 59 -1/2 years of age, except in the case of death,
disability, or distributions described by section 72(t)(2)(A)(iv) of the internal revenue code.
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(iii) Employee annuities or tax -sheltered annuities purchased under section 403(b) of the internal revenue
code by organizations exempt under section 501(c)(3) of the internal revenue code, or by public school systems.
(iv) Distributions from a 401(k) plan attributable to employee contributions mandated by the plan or
attributable to employer contributions.
(b) The following retirement and pension plans not qualified under the internal revenue code:
(i) Plans of the United States, state governments other than this state, and political subdivisions, agencies, or
instrumentalities of this state.
(ii) Plans maintained by a church or a convention or association of churches.
(iii) All other unqualified pension plans that prescribe eligibility for retirement and predetermine
contributions and benefits if the distributions are made from a pension trust.
(c) Retirement or pension benefits received by a surviving spouse if those benefits qualified for a deduction
prior to the decedent’s death. Benefits received by a surviving child are not deductible.
(d) Retirement and pension benefits do not include:
(i) Amounts received from a plan that allows the employee to set the amount of compensation to be deferred
and does not prescribe retirement age or years of service. These plans include, but are not limited to, all of the
following:
(A) Deferred compensation plans under section 457 of the internal revenue code.
(B) Distributions from plans under section 401(k) of the internal revenue code other than plans described in
subdivision (a)(iv).
(C) Distributions from plans under section 403(b) of the internal revenue code other than plans described in
subdivision (a)(iii).
(ii) Premature distributions paid on separation, withdrawal, or discontinuance of a plan prior to the earliest
date the recipient could have retired under the provisions of the plan.
(iii) Payments received as an incentive to retire early unless the distributions are from a pension trust.
(9) Except as otherwise provided in subsection (10) or (11), in determining taxable income under this section,
the following limitations and restrictions apply:
(a) For a person born before 1946, this subsection provides no additional restrictions or limitations under
subsection (1)(f).
(b) Except as otherwise provided in subdivision (c), for a person born in 1946 through 1952, the sum of the
deductions under subsection (1)(f)(i), (ii), and (iv) is limited to $20,000.00 for a single return and $40,000.00 for a
joint return. After that person reaches the age of 67, the deductions under subsection (1)(f)(i), (ii), and (iv) do not
apply and that person is eligible for a deduction of $20,000.00 for a single return and $40,000.00 for a joint return,
which deduction is available against all types of income and is not restricted to income from retirement or pension
benefits. A person who takes the deduction under subsection (1)(e) is not eligible for the unrestricted deduction of
$20,000.00 for a single return and $40,000.00 for a joint return under this subdivision.
(c) Beginning January 1, 2013 for a person born in 1946 through 1952 and beginning January 1, 2018 for a
person born after 1945 who has retired as of January 1, 2013, if that person receives retirement or pension benefits
from employment with a governmental agency that was not covered by the federal social security act, 42 USC 301
to 1397mm, the sum of the deductions under subsection (1)(f)( i), (ii), and (iv) is limited to $35,000.00 for a single
return and, except as otherwise provided under this subdivisi on, $55,000.00 for a joint return. If both spouses
filing a joint return receive retirement or pension benefits from employment with a governmental agency that
was not covered by the federal social security act, 42 USC 301 to 1397mm, the sum of the deducti ons under
subsection (1)(f)(i), (ii), and (iv) is limited to $70,000.00 for a joint return. After that person reaches the age of 67,
the deductions under subsection (1)(f)( i), (ii), and (iv) do not apply and that person is eligible for a deduction of
$35,000.00 for a single return and $55,000.00 for a joint return, or $70,000.00 for a joint return if applicable,
which deduction is available against all types of income and is not restricted to income from retirement or pension
benefits. A person who takes the deduction under subsection (1)(e) is not eligible for the unrestricted deduction of
$35,000.00 for a single return and $55,000.00 for a joint return, or $70,000.00 for a joint return if applicable,
under this subdivision.
(d) Except as otherwise provided under subdivision (c) for a person who was retired as of January 1, 2013, for
a person born after 1952 who has reached the age of 62 through 66 years of age and who receives retirement or
pension benefits from employment with a governmental agency that was not covered by the federal social security
act, 42 USC 301 to 1397mm, the sum of the deductions under subsection (1)(f)( i), ( ii), and ( iv) is limited to
$15,000.00 for a single return and, except as otherwise provided unde r this subdivision, $15,000.00 for a joint
return. If both spouses filing a joint return receive retirement or pension benefits from employment with a
governmental agency that was not covered by the federal social security act, 42 USC 301 to 1397mm, the su m of
the deductions under subsection (1)(f)(i), (ii), and (iv) is limited to $30,000.00 for a joint return.
8
(e) Except as otherwise provided under subdivision (c) or (d), for a person born after 1952, the deduction under
subsection (1)(f)(i), (ii), or (iv) does not apply. When that person reaches the age of 67, that person is eligible for a
deduction of $20,000.00 for a single return and $40,000.00 for a joint return, which deduction is available against
all types of income and is not restricted to income from retirement or pension benefits. For tax years that begin
before January 1, 2026 and after December 31,2028, if a person takes the deduction of $20,000.00 for a single
return and $40,000.00 for a joint return, that person shall not take the deduction under subsection (1)(f)( iii) and
shall not take the personal exemption under subsection (2). For tax years that begin before January 1, 2026 and
after December 31, 2028, that person may elect not to take the deduction of $20,000.00 for a single return and
$40,000.00 for a joint return and elect to take the deduction under subsection (1)(f)(iii) and the personal exemption
under subsection (2) if that election would reduce that person’s tax liability. For tax years that begin on and after
January 1, 2026 and before January 1, 2029, if a person takes the deduction of $20,000.00 for a single return or
$40,000.00 for a joint return, that person shall not take the personal exemption under s ubsection (2). A person
who takes the deduction under subsection (1)(e) is not eligible for the unrestricted deduction of $20,000.00 for a
single return and $40,000.00 for a joint return under this subdivision.
(f) For a joint return, the limitations and restrictions in this subsection shall be applied based on the date of
birth of the older spouse filing the joint return. If a deduction under subsection (1)(f) was claimed on a joint return
for a tax year in which a spouse died and the surviving spouse has not remarried since the death of that spouse,
the surviving spouse is entitled to claim the deduction under subsection (1)(f) in subsequent tax years subject to
the same restrictions and limitations, for a singl e return, that would have applied based on the date of birth of
the older of the 2 spouses. For tax years beginning after December 31, 2019, a surviving spouse born after 1945
who has reached the age of 67 and has not remarried since the death of that spouse may elect to take the deduction
that is available against all types of income subject to the same limitations and restrictions as provided under
this subsection based on the surviving spouse ’s date of birth instead of taking the deduction allowed under
subsection (1)(f), for a single return, based on the date of birth of the older spouse.
(10) In determining taxable income under this section, a taxpayer may elect to deduct retirement or pension
benefits as provided under subsection (1)(f) with the following limitations and restrictions or elect to apply the
limitations and restrictions in subsection (9), or subsection (11) if applicable:
(a) For the 2023 tax year, a taxpayer who was born after 1945 and before 1959 may deduct an amount of
retirement or pension benefits not to exceed 25% of the maximum amount of retirement or pension benefits that
the taxpayer would be allowed to deduct for the tax year under subsection (1)(f)(iv) if the taxpayer’s retirement or
pension benefits were subject to the limitations of that subsection only.
(b) For the 2024 tax year, a taxpayer who was born after 1945 and before 1963 may deduct an amount of
retirement or pension benefits not to exceed 50% of the maximum amount of retirement or pension benefits that
the taxpayer would be allowed to deduct for the tax year under subsection (1)(f)(iv) if the taxpayer’s retirement or
pension benefits were subject to the limitations of that subsection only.
(c) For the 2025 tax year, a taxpayer who was born after 1945 and before 1967 may deduct an amount of
retirement or pension benefits not to exceed 75% of the maximum amount of retirement or pension benefits that
the taxpayer would be allowed to deduct for the tax year under subsection (1)(f)(iv) if the taxpayer’s retirement or
pension benefits were subject to the limitations of that subsection only.
(d) For the 2026 tax year and each tax year after 2026, a taxpayer may deduct retirement or pension benefits
as provided under subsection (1)(f), except that the amounts deductible under subsection (1)(f)(i) and (ii) combined
are subject to the same maximum amounts allowed under subsection (1)(f)(iv) for a single return and a joint return
for that same tax year.
(e) For a joint return, the limitations and restrictions in this subsection shall be applied based on the date of
birth of the older spouse filing the joint return. If a deduction under subsection (1)(f) was claimed on a joint return
for a tax year in which a spouse died and the surviving spouse has not remarried since the death of that spouse,
the surviving spouse is entitled to claim the deduction under subsection (1)(f) in subsequent tax years subject to
the same restrictions and limitations under this subsection, for a single return, that would have applied based on
the date of birth of the older of the 2 spouses.
(11) For tax years beginning on and after January 1, 2023, in determining taxable income under this section,
a taxpayer with retirement or pension benefits received for services as a public police or fire department employee
subject to 1969 PA 312, MCL 423 .231 to 423.247, a state police trooper or state police sergeant subject to
1980 PA 17, MCL 423.271 to 423.287, or a corrections officer employed by a county sheriff in a county jail, work
camp, or other facility maintained by a county that houses adult pr isoners may elect to deduct retirement or
pension benefits as provided under subsection (1)(f) without any additional limitations or restrictions or elect to
apply the limitations and restrictions in subsection (9) or (10).
(12) As used in this section:
(a) “Oil and gas” means oil and gas subject to severance tax under 1929 PA 48, MCL 205.301 to 205.317.
(b) “Senior citizen” means that term as defined in section 514.
(c) “United States 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.
9
Sec. 36. (1) “Taxable income” in the case of a resident estate or trust means federal taxable income as defined
in the internal revenue code subject to the following adjustments:
(a) Add gross interest income and dividends derived from obligations or securities of states other than
Michigan, in the same amount which has been excluded from federal taxable income less related expenses not
deducted in computing federal taxable income because of section 265 of the internal revenue code.
(b) Add taxes on or measured by income to the extent the taxes have been deducted in arriving at federal
taxable income.
(c) 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.
(d) 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 which 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 such income to the extent that the expenses, including amortizable bond
premiums, were deducted in arriving at federal taxable income.
(e) Adjustments resulting from the application of section 271.
(f) Deduct an adjustment resulting from the allocation and apportionment provisions of chapter 3.
(g) For tax years beginning after December 31, 2011, 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 tax years beginning after December 31, 2024, federal taxable income must be calculated as if both of
the following conditions applied, subject to any necessary adjustments under subparagraph (iii):
(i) Sections 168(n) and 174A of the internal revenue code were not in effect.
(ii) Sections 163(j), 168(k), 174, and 179 of the internal revenue code applied as those provisions were in effect
on December 31, 2024.
(iii) The state treasurer shall, if necessary, modify the application of any references in the internal revenue
code to the sections identified in subparagraphs (i) and (ii) in a reasonable manner to carry out the purpose of this
subdivision, including, but not limited to, modifying the application of section references that were amended under
Public Law 119-21.
(i) For tax years beginning after December 31, 2021, federal taxable income must be calculated as if the
transition rules under section 70302 of Public Law 119-21, including, but not limited to, any provisions related to
the application of section 174A of the internal revenue code, do not apply.
(2) The respective shares of an estate or trust and its beneficiaries, including, solely for the purpose of this
allocation, nonresident beneficiaries, in the additions and subtractions to taxable income shall be in proportion to
their respective shares of distributable net income of the estate or trust as defined in the internal revenue code.
If the estate or trust has no distributable net income for the taxable year, the share of each beneficiary in the
additions and subtractions shall be in proportion to his or her share of the estate or trust income for the year,
under local law or the terms of the instrument, which is required to be distributed currently and any other
amounts of such income distributed in the year. Any balance of the additions and subtr actions shall be allocated
to the estate or trust. If capital gains and losses are distributed or distributable to a beneficiary or beneficiaries
under the internal revenue code, the fiduciary shall advise each beneficiary of his or her share of the adjustment
under section 271. The election or failure to elect under section 271 with respect to capital gains and losses taxable
to the estate or trust shall not affect the beneficiary’s right to elect or not to elect under section 271.
(3) An addition or subtraction shall not be made under this section which has the effect of duplicating an item
of income or deduction if the taxpayer establishes to the satisfaction of the commissioner that the item is already
reflected in federal taxable income. If an addition or subtraction with respect to the sale or exchange of obligations
of the United States government proper adjustment, in accordance with rules promulgated by the department, of
the deduction for excess of capital gains over capital losses shall be made.
(4) 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.
Sec. 607. (1) “Federal taxable income” means taxable income as defined in section 63 of the internal revenue
code, except that federal taxable income shall be calculated in the following manner under the following
circumstances:
(a) For tax years that begin before January 1, 2025, federal taxable income must be calculated as if
sections 168(k) and section 199 of the internal revenue code were not in effect.
(b) For tax years beginning after December 31, 2024, federal taxable income must be calculated as if both of
the following conditions applied, subject to any necessary adjustments under subparagraph (iii):
(i) Sections 168(k), 168(n), and 174A of the internal revenue code were not in effect.
(ii) Sections 163(j), 174, and 179 of the internal revenue code applied as those provisions were in effect on
December 31, 2024.
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(iii) The state treasurer shall, if necessary, modify the application of any references in the internal revenue
code to the sections identified in subparagraphs (i) and (ii) in a reasonable manner to carry out the purpose of this
subdivision, including, but not limited to, modifying the application of section references that were amended under
Public Law 119-21.
(c) For tax years beginning after December 31, 2021, federal taxable income must be calculated as if the
transition rules under section 70302 of Public Law 119-21, including, but not limited to, any provisions related to
the application of section 174A of the internal revenue code, do not apply.
(2) “Flow-through entity ” means an entity that for the applicable tax year is treated as a subchapter S
corporation under section 1362(a) of the internal revenue code, a general partnership, a trust, a limited
partnership, a limited liability partnership, or a limited liability co mpany, that for the tax year is not taxed as a
corporation for federal income tax purposes. Flow -through entity does not include any entity disregarded or
treated as a corporation under section 699.
(3) “Foreign operating entity” means a United States corporation that satisfies each of the following:
(a) Would otherwise be a part of a unitary business group that has at least 1 corporation included in the unitary
business group that is taxable in this state.
(b) Has substantial operations outside the United States, the District of Columbia, any territory or possession
of the United States except for the Commonwealth of Puerto Rico, or a political subdivision of any of the foregoing.
(c) At least 80% of its income is active foreign business income as defined in section 871( l)(1)(B)(ii) of the
internal revenue code.
(4) “Gross receipts” means the entire amount received by the taxpayer from any activity whether in intrastate,
interstate, or foreign commerce carried on for direct or indirect gain, benefit, or advantage to the taxpayer or to
others except for the following:
(a) Proceeds from sales by a principal that the taxpayer collects in an agency capacity solely on behalf of the
principal and delivers to the principal.
(b) Amounts received by the taxpayer as an agent solely on behalf of the principal that are expended by the
taxpayer for any of the following:
(i) The performance of a service by a third party for the benefit of the principal that is required by law to be
performed by a licensed person.
(ii) The performance of a service by a third party for the benefit of the principal that the taxpayer has not
undertaken a contractual duty to perform.
(iii) Principal and interest under a mortgage loan or land contract, lease or rental payments, or taxes, utilities,
or insurance premiums relating to real or personal property owned or leased by the principal.
(iv) A capital asset of a type that is, or under the internal revenue code will become, eligible for depreciation,
amortization, or accelerated cost recovery by the principal for federal income tax purposes, or for real property
owned or leased by the principal.
(v) Property not described under subparagraph ( iv) purchased by the taxpayer on behalf of the principal and
that the taxpayer does not take title to or use in the course of performing its contractual business activities.
(vi) Fees, taxes, assessments, levies, fines, penalties, or other payments established by law that are paid to a
governmental entity and that are the legal obligation of the principal.
(c) Amounts that are excluded from gross income of a foreign corporation engaged in the international
operation of aircraft under section 883(a) of the internal revenue code.
(d) Amounts received by an advertising agency used to acquire advertising media time, space, production, or
talent on behalf of another person.
(e) Notwithstanding any other provision of this section, amounts received by a taxpayer that manages real
property owned by the taxpayer ’s client that are deposited into a separate account kept in the name of the
taxpayer’s client and that are not reimbursements to the taxpayer and are not indirect payments for management
services that the taxpayer provides to that client.
(f) Proceeds from the taxpayer ’s transfer of an account receivable if the sale that generated the account
receivable was included in gross receipts for federal income tax purposes. This subdivision does not apply to a
taxpayer that during the tax year both buys and sells any receivables.
(g) Proceeds from any of the following:
(i) The original issue of stock or equity instruments.
(ii) The original issue of debt instruments.
(h) Refunds from returned merchandise.
(i) Cash and in-kind discounts.
(j) Trade discounts.
(k) Federal, state, or local tax refunds.
(l) Security deposits.
(m) Payment of the principal portion of loans.
(n) Value of property received in a like-kind exchange.
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(o) Proceeds from a sale, transaction, exchange, involuntary conversion, or other disposition of tangible,
intangible, or real property that is a capital asset as defined in section 1221(a) of the internal revenue code or
land that qualifies as property used in the trade or business as defined in section 1231(b) of the internal revenue
code, less any gain from the disposition to the extent that gain is included in federal taxable income.
(p) The proceeds from a policy of insurance, a settlement of a claim, or a judgment in a civil action less any
proceeds under this subdivision that are included in federal taxable income.
(5) “Insurance company” means an authorized insurer as defined in section 108 of the insurance code of 1956,
1956 PA 218, MCL 500.108. Insurance company does not include a health maintenance organization authorized
under chapter 35 of the insurance code of 1956, 1956 PA 218, MCL 500.3501 to 500.3573.
(6) “Internal revenue code” means the United States internal revenue code of 1986 in effect on January 1, 2025
or, at the option of the taxpayer, in effect for the tax year.
(7) “Member”, when used in reference to a flow -through entity, means a shareholder of a subchapter S
corporation, a partner in a general partnership, a limited partnership, or a limited liability partnership, a member
of a limited liability company, or a beneficiary of a trust that is a flow-through entity.
Sec. 695. (1) Beginning with the 2022-2023 state fiscal year through the 2023-2024 state fiscal year, from the
tax levied under this part, the revenue collected under this part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $50,000,000.00, if available, to the revitalization
and placemaking fund created in section 696.
(d) After the deposits under subdivisions (a), (b), and (c), up to $500,000,000.00, if available, to the strategic
outreach and attraction reserve fund created in section 4 of the Michigan trust fund act, 2000 PA 489,
MCL 12.254.
(e) The balance of any revenue collected under this part after the deposits under subdivisions (a), (b), (c), and
(d), to the general fund.
(2) For 2024-2025 state fiscal year only, from the tax levied under this part, the revenue collected under this
part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $50,000,000.00, if available, to the revitalization
and placemaking fund created in section 696.
(d) After the deposits under subdivisions (a), (b), and (c), up to $250,000,000.00, if available, to the healthy
Michigan fund created in section 5953 of the public health code, 1978 PA 368, MCL 333.5953.
(e) The balance of any revenue collected under this part after the deposits under subdivisions (a), (b), (c), and
(d), to the general fund.
(3) For the 2025-2026 state fiscal year only, from the tax levied under this part, the revenue collected under
this part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $688,000,000.00, if available, to the neighborhood
road fund created in section 13c of 1951 PA 51, MCL 247.663c.
(d) The balance of the revenue collected under this part after the deposits under subdivisions (a) through (c)
to the general fund.
(4) For the 2026 -2027 state fiscal year only, from the tax levied under this part, the revenue collected under
this part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $776,000,000.00, if available, to the neighborhood
road fund created in section 13c of 1951 PA 51, MCL 247.663c.
12
(d) The balance of the revenue collected under this part after the deposits under subdivisions (a) through (c)
to the general fund.
(5) For the 2027 -2028 state fiscal year only, from the tax levied under this part, the revenue collected under
this part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $864,000,000.00, if available, to the neighborhood
road fund created in section 13c of 1951 PA 51, MCL 247.663c.
(d) The balance of the revenue collected under this part after the deposits under subdivisions (a) through (c)
to the general fund.
(6) For the 2028 -2029 state fiscal year only, from the tax levied under this part, the revenue collected under
this part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $952,000,000.00, if available, to the neighborhood
road fund created in section 13c of 1951 PA 51, MCL 247.663c.
(d) The balance of the revenue collected under this part after the deposits under subdivisions (a) through (c)
to the general fund.
(7) Beginning with the 2029 -2030 state fiscal year, from the tax levied under this part, the revenue collected
under this part must be deposited in the following manner:
(a) Up to $1,200,000,000.00 to the general fund.
(b) After the deposit under subdivision (a), up to $50,000,000.00, if available, to the Michigan housing and
community development fund created in section 58a of the state housing development authority act of 1966,
1966 PA 346, MCL 125.1458a.
(c) After the deposits under subdivisions (a) and (b), up to $1,040,000,000.00, if available, to the neighborhood
road fund created in section 13c of 1951 PA 51, MCL 247.663c.
(d) The balance of the revenue collected under this part after the deposits under subdivisions (a) through (c)
to the general fund.
Sec. 805. (1) “Federal taxable income” means taxable income as defined in section 63 of the internal revenue
code without the deductions described under section 703(a)(2) of the internal revenue code and federal taxable
income must also be calculated in the following manner under the following circumstances:
(a) For tax years beginning after December 31, 2021, as if the transition rules under section 70302 of Public
Law 119-21, including, but not limited to, any provisions related to the application of section 174A of the internal
revenue code, do not apply.
(b) For tax years beginning after December 31, 2024, as if both of the following conditions applied, subject to
any necessary adjustments under subparagraph (iii):
(i) Sections 168(n) and 174A of the internal revenue code were not in effect.
(ii) Sections 163(j), 168(k), 174, and 179 of the internal revenue code applied as those provisions were in effect
on December 31, 2024.
(iii) The state treasurer shall, if necessary, modify the application of any references in the internal revenue
code to the sections identified in subparagraphs (i) and (ii) in a reasonable manner to carry out the purpose of this
subdivision, including, but not limited to, modifying the application of section references that were amended under
Public Law 119-21.
(c) For the purposes of this part in computing federal taxable income under this subsection, an S corporation
is treated as a corporation under section 1361(a)(2) of the internal revenue code and a partnership is treated as
an association taxable as a corporation pursuant to an election under 26 CFR 301.7701-3(a).
(2) “Financial institution” means that term as defined in section 651.
(3) “Flow-through entity” means an entity that for the applicable tax year is treated as an S corporation or a
partnership under the internal revenue code for federal income tax purposes. Flow-through entity does not include
a publicly traded partnership, any entity disregarded or treated as a corporation under section 845, or any person
subject to the tax imposed under chapter 13.
(4) “Insurance company” means that term as defined in section 607.
13
(5) “Internal revenue code” means the United States internal revenue code of 1986 in effect on January 1, 2025
or, at the option of the taxpayer, in effect for the tax year.
(6) “Member”, when used in reference to a flow -through entity, means a shareholder of an S corporation or a
partner or member in a partnership.
Enacting section 1. Section 51d of the income tax act of 1967, 1967 PA 281, MCL 206.51d, is repealed effective
September 30, 2025.
Enacting section 2. This amendatory act does not take effect unless all of the following bills of the
103rd Legislature are enacted into law:
(a) House Bill No. 4183.
(b) House Bill No. 4951.
(c) House Bill No. 4968.
This act is ordered to take immediate effect.
Clerk of the House of Representatives
Secretary of the Senate
Approved___________________________________________
____________________________________________________
Governor