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HB-5806, As Passed Senate, July 3, 2026
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SENATE SUBSTITUTE FOR
HOUSE BILL NO. 5806
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
(MCL 206.1 to 206.847) by adding sections 281 and 678.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 281. (1) Except as otherwise provided under this section, 1
for tax years that begin on and after January 1, 2027, a qualified 2
taxpayer may, in a form and manner as determined by the department, 3
claim a housing opportunity tax credit for a qualified project 4
against the tax imposed under this part in an amount equal to the 5
amount listed on the allocation report for that qualified taxpayer 6
for that qualified project. Except as otherwise provided in 7
subsection (2), a qualified taxpayer that is an owner shall claim a 8
housing opportunity tax credit listed on an allocation report for 9
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the owner's tax year described in section 22e(5) of the state 1
housing development authority act of 1966, 1966 PA 346, MCL 2
125.1422e. Except as otherwise provided in subsection (2), a 3
qualified taxpayer that has been allocated a housing opportunity 4
tax credit listed on an allocation report shall claim the credit 5
for the qualified taxpayer's tax year described in section 22e(6) 6
of the state housing development authority act of 1966, 1966 PA 7
346, MCL 125.1422e. A qualified taxpayer shall not claim a housing 8
opportunity tax credit for a calendar year listed on an allocation 9
report unless the qualified taxpayer and the amount of the 10
qualified taxpayer's credit are listed on that allocation report. 11
(2) To claim a housing opportunity tax credit under this 12
section, the qualified taxpayer shall attach a copy of the 13
eligibility statement to the annual return filed under this part on 14
which the credit is claimed. However, if the owner of the qualified 15
project that has received an approval notice has submitted a final 16
cost certification and a request for an eligibility statement to 17
the authority but the authority has not yet approved the final cost 18
certification and issued the eligibility statement to the owner, 19
the qualified taxpayer may either claim the housing opportunity tax 20
credit on the qualified taxpayer's annual return for the tax year 21
as prescribed under subsection (1) by attaching a copy of the 22
approval notice for that qualified project or wait to claim the 23
credit on the qualified taxpayer's annual return for the qualified 24
taxpayer's tax year in which the eligibility statement for the 25
qualified project is issued. 26
(3) If any portion of a federal low-income housing tax credit 27
claimed for a qualified project for which a housing opportunity tax 28
credit is also claimed under this section is required to be 29
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recaptured or is otherwise disallowed during the credit period 1
under section 42 of the internal revenue code, the qualified 2
taxpayer that claimed the housing opportunity tax credit under this 3
section for that same qualified project is also required to 4
recapture a portion of the housing opportunity tax credit as 5
provided under this subsection. The percentage of the housing 6
opportunity tax credit subject to recapture must be equal to the 7
percentage of the federal low-income housing tax credit subject to 8
recapture or otherwise disallowed during the same tax year. Any 9
housing opportunity tax credits recaptured or disallowed must be 10
added back to the income tax liability of the qualified taxpayer 11
that claimed the housing opportunity tax credit in a like amount 12
and must be included on the annual return of the qualified taxpayer 13
submitted for the tax year in which the recapture or disallowance 14
event is identified on the federal return. 15
(4) If an updated allocation report is provided to the 16
department under section 22e(8)(b) of the state housing development 17
authority act of 1966, 1966 PA 346, MCL 125.1422e, that reduces or 18
increases the amount of a housing opportunity tax credit that was 19
previously claimed by a qualified taxpayer, each qualified taxpayer 20
that had its credit amount adjusted shall file an amended return as 21
required under section 325 for the affected tax year to adjust the 22
amount of the credit accordingly. 23
(5) The housing opportunity tax credit allowed under this 24
section must be claimed after all other nonrefundable credits 25
allowed under this part. If the housing opportunity tax credit 26
allowed under this section for the tax year and any unused 27
carryforward of the housing opportunity tax credit allowed by this 28
section exceed the qualified taxpayer's tax liability for the tax 29
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year, that portion that exceeds the tax liability for the tax year 1
must not be refunded but may be carried forward to offset tax 2
liability in subsequent tax years for 10 years or until used up, 3
whichever occurs first. If a qualified taxpayer has an unused 4
carryforward of a housing opportunity tax credit under this 5
section, the amount otherwise added under subsection (3) to the 6
qualified taxpayer's tax liability may instead be used to reduce 7
the qualified taxpayer's carryforward under this section. 8
(6) As used in this section: 9
(a) "Allocation report", "approval notice", "credit period", 10
"eligibility statement", "federal low-income housing tax credit", 11
"housing opportunity tax credit", "owner", and "qualified project" 12
mean those terms as defined under section 22e of the state housing 13
development authority act of 1966, 1966 PA 346, MCL 125.1422e. 14
(b) "Authority" means the Michigan state housing development 15
authority created under section 21 of the state housing development 16
authority act of 1966, 1966 PA 346, MCL 125.1421. 17
(c) "Qualified taxpayer" means any of the following: 18
(i) A taxpayer that is the owner of a qualified project and has 19
received an eligibility statement for that qualified project. 20
(ii) A taxpayer that is the owner of a qualified project that 21
received an approval notice and has submitted a final cost 22
certification and a request for an eligibility statement to the 23
authority but the authority has not yet approved the final cost 24
certification and issued the eligibility statement to the owner. 25
(iii) A taxpayer that owns a direct or indirect, through 1 or 26
more other flow-through entities, interest in an owner described 27
under subparagraph (i) or (ii) and that has been allocated a housing 28
opportunity tax credit at any time prior to filing an annual or 29
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amended return under this part on which a housing opportunity tax 1
credit under this section is claimed. 2
Sec. 678. (1) Except as otherwise provided under this section, 3
for tax years that begin on and after January 1, 2027, a qualified 4
taxpayer may, in a form and manner as determined by the department, 5
claim a housing opportunity tax credit for a qualified project 6
against the tax imposed under this part in an amount equal to the 7
amount listed on the allocation report for that qualified taxpayer 8
for that qualified project. Except as otherwise provided in 9
subsection (2), a qualified taxpayer that is an owner shall claim a 10
housing opportunity tax credit listed on an allocation report for 11
the owner's tax year described in section 22e(5) of the state 12
housing development authority act of 1966, 1966 PA 346, MCL 13
125.1422e. Except as otherwise provided in subsection (2), a 14
qualified taxpayer that has been allocated a housing opportunity 15
tax credit listed on an allocation report shall claim the credit 16
for the qualified taxpayer's tax year described in section 22e(6) 17
of the state housing development authority act of 1966, 1966 PA 18
346, MCL 125.1422e. A qualified taxpayer shall not claim a housing 19
opportunity tax credit for a calendar year listed on an allocation 20
report unless the qualified taxpayer and the amount of the 21
qualified taxpayer's credit are listed on that allocation report. 22
(2) To claim a housing opportunity tax credit under this 23
section, the qualified taxpayer shall attach a copy of the 24
eligibility statement to the annual return filed under this part on 25
which the credit is claimed. However, if the owner of the qualified 26
project that has received an approval notice has submitted a final 27
cost certification and a request for an eligibility statement to 28
the authority but the authority has not yet approved the final cost 29
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certification and issued the eligibility statement to the owner, 1
the qualified taxpayer may either claim the housing opportunity tax 2
credit on the qualified taxpayer's annual return for the tax year 3
as prescribed under subsection (1) by attaching a copy of the 4
approval notice for that qualified project or wait to claim the 5
credit on the qualified taxpayer's annual return for the qualified 6
taxpayer's tax year in which the eligibility statement for the 7
qualified project is issued. 8
(3) If any portion of a federal low-income housing tax credit 9
claimed for a qualified project for which a housing opportunity tax 10
credit is also claimed under this section or section 476a of the 11
insurance code of 1956, 1956 PA 218, MCL 500.476a, is required to 12
be recaptured or is otherwise disallowed during the credit period 13
under section 42 of the internal revenue code, the qualified 14
taxpayer that claimed the housing opportunity tax credit under this 15
section or section 476a of the insurance code of 1956, 1956 PA 218, 16
MCL 500.476a, for that same qualified project is also required to 17
recapture a portion of the housing opportunity tax credit as 18
provided under this subsection. The percentage of the housing 19
opportunity tax credit subject to recapture must be equal to the 20
percentage of the federal low-income housing tax credit subject to 21
recapture or otherwise disallowed during the same tax year. Except 22
for a qualified taxpayer that is subject to the tax under chapter 23
12, housing opportunity tax credits recaptured or disallowed must 24
be added back to the income tax liability of the qualified taxpayer 25
that claimed the housing opportunity tax credit in a like amount 26
and must be included on the annual return of the qualified taxpayer 27
submitted for the tax year in which the recapture or disallowance 28
event is identified on the federal return. For a qualified taxpayer 29
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that, without regard to the amount of any recapture that may be 1
required under this subsection, is subject to the tax under chapter 2
12 for the tax year in which the recapture or disallowance event is 3
identified on the federal return, any housing opportunity tax 4
credits recaptured or disallowed under this subsection must be 5
added back to the qualified taxpayer's tax liability under chapter 6
12 in a like amount and must be included on the qualified 7
taxpayer's annual return submitted for the tax year in which the 8
recapture or disallowance event is identified on the federal 9
return. 10
(4) If an updated allocation report is provided to the 11
department under section 22e(8)(b) of the state housing development 12
authority act of 1966, 1966 PA 346, MCL 125.1422e, that reduces or 13
increases the amount of a housing opportunity tax credit that was 14
previously claimed by a qualified taxpayer, each qualified taxpayer 15
that had its credit amount adjusted shall file an amended return as 16
required under section 687 for the affected tax year to adjust the 17
amount of the credit accordingly. 18
(5) The housing opportunity tax credit allowed under this 19
section must be claimed after all other nonrefundable credits 20
allowed under this part. If the housing opportunity tax credit 21
allowed under this section for the tax year and any unused 22
carryforward of the housing opportunity tax credit allowed by this 23
section exceed the qualified taxpayer's tax liability for the tax 24
year, that portion that exceeds the tax liability for the tax year 25
must not be refunded but may be carried forward to offset tax 26
liability in subsequent tax years for 10 years or until used up, 27
whichever occurs first. If a qualified taxpayer has an unused 28
carryforward of a housing opportunity tax credit under this 29
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section, the amount otherwise added under subsection (3) to the 1
qualified taxpayer's tax liability may instead be used to reduce 2
the qualified taxpayer's carryforward under this section. 3
(6) As used in this section: 4
(a) "Allocation report", "approval notice", "credit period", 5
"eligibility statement", "federal low-income housing tax credit", 6
"housing opportunity tax credit", "owner", and "qualified project" 7
mean those terms as defined under section 22e of the state housing 8
development authority act of 1966, 1966 PA 346, MCL 125.1422e. 9
(b) "Authority" means the Michigan state housing development 10
authority created under section 21 of the state housing development 11
authority act of 1966, 1966 PA 346, MCL 125.1421. 12
(c) "Qualified taxpayer" means any of the following: 13
(i) A taxpayer that is the owner of a qualified project and has 14
received an eligibility statement for that qualified project. 15
(ii) A taxpayer that is the owner of a qualified project that 16
received an approval notice and has submitted a final cost 17
certification and a request for an eligibility statement to the 18
authority but the authority has not yet approved the final cost 19
certification and issued the eligibility statement to the owner. 20
(iii) A taxpayer that owns a direct or indirect, through 1 or 21
more other flow-through entities, interest in an owner described 22
under subparagraph (i) or (ii) and that has been allocated a housing 23
opportunity tax credit at any time prior to filing an annual or 24
amended return under this part on which a housing opportunity tax 25
credit under this section is claimed. 26
Enacting section 1. This amendatory act does not take effect 27
unless all of the following bills of the 103rd Legislature are 28
enacted into law: 29
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Final Page
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(a) Senate Bill No. 966. 1
(b) House Bill No. 5807. 2