HB 5118

HOUSE BILL NO. 5118
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
(MCL 206.1 to 206.847) by adding sections 279 and 679.
the people of the state of michigan enact:
Sec. 279. (1) For tax years
beginning on and after January 1, 2026, a taxpayer other than an organization
exempt from federal taxation under section 501(c) of the internal revenue code
that is an employer may claim a work opportunity tax credit against the tax
imposed by this part for qualified wages paid to qualified employees equal to 50%
of the amount of the credit the taxpayer is allowed to claim as a credit under
section 51 of the internal revenue code for a tax year on a return filed under
this part for the same tax year or would have been allowed to claim if the
credit under section 51 of the internal revenue code was still in effect. In
calculating the amount of the credit allowed under this section, the taxpayer
shall exclude from the amount of the credit allowed or that would have been
allowed under section 51 of the internal revenue code for that same tax year
both of the following:
(a) Any
amount attributable to employees who were not qualified employees.
(b) Any
amount of unused credits under section 51 of the internal revenue code that is
carried back or forward from another tax year in accordance with section 39 of
the internal revenue code.
(2) For a
taxpayer who is a member of a flow-through entity that qualifies for the credit
under this section, that taxpayer may claim a credit against the member's tax
liability under this part based on the member's distributive share of business
income reported from that flow-through entity or an alternative method approved
by the department.
(3) If the
credit allowed under this section for the tax year exceeds the taxpayer's tax
liability for the tax year, that portion that exceeds the tax liability for the
tax year must not be refunded.
(4) As used
in this section:
(a)
"Member of a targeted group" means an individual identified and
defined under section 51(d) of the internal revenue code.
(b)
"Qualified employee" means an employee who is a resident of this
state and has been certified by the Michigan unemployment insurance agency as a
member of a targeted group.
(c)
"Qualified wages" means that term as defined under section 51 of the
internal revenue code.
Sec. 679. (1) For tax years
beginning on and after January 1, 2026, a taxpayer other than an organization
exempt from federal taxation under section 501(c) of the internal revenue code
that is an employer may claim a work opportunity tax credit against the tax imposed
by this part for qualified wages paid to qualified employees equal to 50% of
the amount of the credit the taxpayer is allowed to claim as a credit under section 51 of the internal revenue code for a
tax year on a return filed under this part for the same tax year or would have
been allowed to claim if the credit under section 51 of the internal revenue
code was still in effect. In calculating the amount of the credit allowed under
this section, the taxpayer shall exclude from the amount of the credit allowed or
that would have been allowed under section 51 of the internal revenue code for
that same tax year, both of the following:
(a) Any
amount attributable to employees who were not qualified employees.
(b) Any
amount of unused credits under section 51 of the internal revenue code that is
carried back or forward from another tax year in accordance with section 39 of
the internal revenue code.
(2) If the
credit allowed under this section for the tax year exceeds the taxpayer's tax
liability for the tax year, that portion that exceeds the tax liability for the
tax year must not be refunded.
(3) As used in this section:
(a)
"Member of a targeted group" means an individual identified and
defined under section 51(d) of the internal revenue code.
(b) "Qualified
employee" means an employee who is a resident of this state and has been
certified by the Michigan unemployment insurance agency as a member of a
targeted group.
(c) "Qualified
wages" means
that term as defined in section 51 of the internal revenue code.
Enacting section 1.
This amendatory act does not take effect unless House Bill No. 5119 (request
no. H04424'25) of the 103rd Legislature is enacted into law.