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HOUSE BILL NO. 5925
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 623 (MCL 206.623), as amended by 2021 PA 135.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 623. (1) Except as otherwise provided in this part, there 1
is levied and imposed a corporate income tax on every taxpayer with 2
business activity within this state or ownership interest or 3
beneficial interest in a flow-through entity that has business 4
activity in this state unless prohibited by 15 USC 381 to 384. The 5
April 30, 2026, Introduced by Reps. Mentzer, Miller, Herzberg, Wegela, MacDonell, Brixie, Price,
Weiss, Wooden, Breen and McFall and referred to Committee on Economic Competitiveness.
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corporate income tax is imposed on the corporate income tax base, 1
after allocation or apportionment to this state, at the rate of 2
6.0%. 3
(2) The corporate income tax base means a taxpayer's business 4
income subject to the following adjustments, before allocation or 5
apportionment, and the adjustment in subsection (4) after 6
allocation or apportionment: 7
(a) Add interest income and dividends derived from obligations 8
or securities of states other than this state, in the same amount 9
that was excluded from federal taxable income, less the related 10
portion of expenses not deducted in computing federal taxable 11
income because of sections 265 and 291 of the internal revenue 12
code. 13
(b) Add all taxes on or measured by net income including the 14
tax imposed under this part to the extent that the taxes were 15
deducted in arriving at federal taxable income including any direct 16
or indirect allocated share of taxes paid by a flow-through entity 17
under part 4. 18
(c) Add any carryback or carryover of a net operating loss to 19
the extent deducted in arriving at federal taxable income. 20
(d) To the extent included in federal taxable income, deduct 21
dividends and royalties received from persons other than United 22
States persons and foreign operating entities, including, but not 23
limited to, amounts determined under section 78 of the internal 24
revenue code or sections 951 to 965 of the internal revenue code. 25
(e) Except as otherwise provided under this subdivision, to 26
the extent deducted in arriving at federal taxable income, add any 27
royalty, interest, or other expense paid to a person related to the 28
taxpayer by ownership or control for the use of an intangible asset 29
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if the person is not included in the taxpayer's unitary business 1
group. The addition of any royalty, interest, or other expense 2
described under this subdivision is not required to be added if the 3
taxpayer can demonstrate that the transaction has a nontax business 4
purpose, is conducted with arm's-length pricing and rates and terms 5
as applied in accordance with sections 482 and 1274(d) of the 6
internal revenue code, and 1 of the following is true: 7
(i) The transaction is a pass through of another transaction 8
between a third party and the related person with comparable rates 9
and terms. 10
(ii) An addition would result in double taxation. For purposes 11
of this subparagraph, double taxation exists if the transaction is 12
subject to tax in another jurisdiction. 13
(iii) An addition would be unreasonable as determined by the 14
state treasurer. 15
(iv) The related person recipient of the transaction is 16
organized under the laws of a foreign nation which that has in 17
force a comprehensive income tax treaty with the United States. 18
(f) To the extent included in federal taxable income, deduct 19
interest income derived from United States obligations. 20
(g) Eliminate all of the following: 21
(i) Income from producing oil and gas to the extent included in 22
federal taxable income. 23
(ii) Expenses of producing oil and gas to the extent deducted 24
in arriving at federal taxable income. 25
(h) For a qualified taxpayer, eliminate all of the following: 26
(i) Income derived from a mineral to the extent included in 27
federal taxable income. 28
(ii) Expenses related to the income deductible under 29
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subparagraph (i) to the extent deducted in arriving at federal 1
taxable income. 2
(i) To the extent deducted in arriving at federal taxable 3
income, add any specified outsourcing expenses. For purposes of 4
this subdivision: 5
(i) "Eligible expenses" means any trade or business expenses 6
that the taxpayer is allowed to claim as a deduction under section 7
162 of the internal revenue code and any permit and license fees, 8
lease brokerage fees, equipment installation costs, and any other 9
similar expenses. 10
(ii) "Specified outsourcing expenses" means any eligible 11
expenses paid or incurred by the taxpayer and attributable to the 12
elimination of any trade or business of the taxpayer that was 13
located in this state and any eligible expenses paid or incurred by 14
the taxpayer and attributable to the relocation of any trade or 15
business of the taxpayer that was previously located in this state 16
and subsequently reestablished outside of this state. 17
(3) For purposes of subsection (2), the business income of a 18
unitary business group is the sum of the business income of each 19
person included in the unitary business group less any items of 20
income and related deductions arising from transactions including 21
dividends between persons included in the unitary business group. 22
(4) Deduct any available business loss incurred after December 23
31, 2011. As used in this subsection, "business loss" means a 24
negative business income taxable amount after allocation or 25
apportionment. For purposes of this subsection, a taxpayer that 26
acquires the assets of another corporation in a transaction 27
described under section 381(a)(1) or (2) of the internal revenue 28
code may deduct any business loss attributable to that distributor 29
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or transferor corporation. The business loss shall be carried 1
forward to the year immediately succeeding the loss year as an 2
offset to the allocated or apportioned corporate income tax base, 3
then successively to the next 9 taxable years following the loss 4
year or until the loss is used up, whichever occurs first. 5
(5) As used in this section, "oil and gas" means oil and gas 6
that is subject to severance tax under 1929 PA 48, MCL 205.301 to 7
205.317. 8