HB 5649

HOUSE BILL NO. 5649
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
(MCL 206.1 to 206.847) by adding sections 279 and 672.
the people of the state of michigan enact:
Sec. 279. (1) For
tax years beginning on and after January 1, 2026, a qualified taxpayer may
claim a credit against the tax imposed by this part equal to the sum of the
following:
(a) For each apprentice trained by the qualified taxpayer in the tax
year, the sum of 50% of the qualified expenses defined in subsection (5)(f)(i) and (ii) and 100% of the qualified expenses
defined in subsection (5)(f)(iii) paid by the qualified
taxpayer in the tax year or $2,000.00, whichever is less.
(b) For each eligible student employed by the qualified taxpayer in the
tax year in fulfillment of a work-based learning experience, internship, or
cooperative education program associated with the career-technical education
program, pre-apprenticeship program, or youth apprenticeship program in which
the eligible student is enrolled, 50% of the qualified expenses defined in subsection
(5)(f)(i) and (ii) paid by the qualified taxpayer in the
tax year or $2,000.00, whichever is less.
(c) For a qualified taxpayer that has less than 50 employees, 10% of the
sum of the amount calculated under subdivisions (a) and (b).
(2) For a qualified 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 exceeds the tax liability
of the taxpayer under this part for the tax year, that portion of the credit
that exceeds the tax liability must be refunded.
(4) The credit allowed under this section must be claimed in a form and
manner as prescribed by the department.
(5) As used
in this section:
(a) "Apprentice" means an individual who is a
resident of this state, is 16 years of age or older, and is trained by a
taxpayer through a program that meets all of the following criteria:
(i) The program is
registered with the Employment and Training Administration of the United States
Department of Labor.
(ii) The program is
provided pursuant to an apprenticeship agreement signed by the taxpayer and the
apprentice.
(iii) The program is
filed with a local workforce development board.
(iv) The program
includes a documented training plan that is consistent with federal
apprenticeship standards under 29 CFR 29.5.
(b) "Career and technical education program" means that term
as defined under section 3 of the revised school code, 1976 PA 451, MCL 380.3.
(c) "Eligible student" means an individual who is a resident
of this state, is 19 years of age or younger, and is enrolled in a career and technical
education program, a pre-apprenticeship program, or a youth apprenticeship
program.
(d) "Local workforce development board" means a board
authorized under the workforce innovation and opportunity act, 29 USC 3101 to
3361, that has the responsibility to ensure that the workforce needs of the
employers in the geographic area governed by the local unit of government are
met.
(e) "Pre-apprenticeship program" means a program that prepares
individuals for entry into a program that meets all of the criteria under
subdivision (a) and that is recognized by the department of labor and economic
opportunity.
(f) "Qualified expenses" means all of the following expenses
paid by the taxpayer in a tax year that begins after December 31, 2025 that
were not paid for with funds the taxpayer received or retained, that the
taxpayer would not otherwise have received or retained, and that are used for
training an apprentice or an eligible student:
(i) Salary and
wages paid to an apprentice or eligible student, as applicable.
(ii) Fringe benefits
and other payroll expenses paid for the benefit of an apprentice or eligible
student, as applicable.
(iii) Costs of
classroom instruction and related expenses identified as costs for which the
taxpayer is responsible under an apprenticeship agreement, including, but not
limited to, tuition, fees, and books for college-level courses.
(g) "Qualified taxpayer" means a taxpayer who is an employer.
(h) "Resident" means that term as defined under section 18.
(i) "Youth apprenticeship program" means a structured
work-based learning program that is recognized by the department of labor and
economic opportunity that combines paid work experience with related classroom
instruction.
Sec. 672. (1) For
tax years beginning on and after January 1, 2026, a taxpayer may claim a credit
against the tax imposed by this part equal to the sum of the following:
(a) For each apprentice trained by the taxpayer in the tax year, the sum
of 50% of the qualified expenses defined in subsection (5)(f)(i) and (ii) and 100% of the qualified expenses
defined in subsection (5)(f)(iii) paid by the
taxpayer in the tax year or $2,000.00, whichever is less.
(b) For each eligible student employed by the taxpayer in the tax year in
fulfillment of a work-based learning experience, internship, or cooperative
education program associated with the career-technical education program,
pre-apprenticeship program, or youth apprenticeship program in which the
eligible student is enrolled, 50% of the qualified expenses defined in
subsection (5)(f)(i) and (ii) paid by the taxpayer in the tax year or
$2,000.00, whichever is less.
(c) For a taxpayer that has less than 50 employees, 10% of the sum of
the amount calculated under subdivisions (a) and (b).
(2) If the credit allowed under this section exceeds the tax liability
of the taxpayer under this part for the tax year, that portion of the credit
that exceeds the tax liability must be refunded.
(3) The credit allowed under this section must be claimed in a form and
manner as prescribed by the department.
(4) For each year that the credit under this section and section 279 is
in effect, the department of labor and economic opportunity shall prepare a
report containing information including, but not limited to, the number of taxpayers
taking advantage of those credits, the number of apprentices participating in
the program, the number of eligible students employed, the number of
apprentices who complete a program the costs of which were the basis of the
credits under this act, the number of apprentices that were hired by the
taxpayer after the apprenticeship training was completed for which the taxpayer
claimed a credit under this act for the costs of training that apprentice,
information on the employment status of individuals who have completed an
apprenticeship to the extent the information is available, and the fiscal
impact of those credits. The report must also include wage outcomes for
apprentices who complete the program and retention data for apprentices hired
after completing the program. The department of labor and economic opportunity
shall transmit this report to the house and senate committees with jurisdiction
over finance and to the house and senate appropriations committees. This report
is due no later than the first day of March each year.
(5) As used in this section:
(a) "Apprentice" means an individual who
is a resident of this state, is 16 years of age or older, and is trained by a
taxpayer through a program that meets all of the following criteria:
(i) The program is
registered with the Employment and Training Administration of the United States
Department of Labor.
(ii) The program is
provided pursuant to an apprenticeship agreement signed by the taxpayer and the
apprentice.
(iii) The program is
filed with a local workforce development board.
(iv) The program
includes a documented training plan that is consistent with federal
apprenticeship standards under 29 CFR 29.5.
(b) "Career and technical education program" means that term
as defined under section 3 of the revised school code, 1976 PA 451, MCL 380.3.
(c) "Eligible student" means an individual who is a resident
of this state, is 19 years of age or younger, and is enrolled in a career and technical
education program, a pre-apprenticeship program, or a youth apprenticeship
program.
(d) "Local workforce development board" means a board
authorized under the workforce innovation and opportunity act, 29 USC 3101 to
3361, that has the responsibility to ensure that the workforce needs of the
employers in the geographic area governed by the local unit of government are
met.
(e) "Pre-apprenticeship program" means a program that prepares
individuals for entry into a program that meets all of the criteria under
subdivision (a) and that is recognized by the department of labor and economic
opportunity.
(f) "Qualified expenses" means all of the following expenses
paid by the taxpayer in a tax year that begins after December 31, 2025 that
were not paid for with funds the taxpayer received or retained, that the
taxpayer would not otherwise have received or retained, and that are used for
training an apprentice or an eligible student:
(i) Salary and
wages paid to an apprentice or eligible student, as applicable.
(ii) Fringe benefits
and other payroll expenses paid for the benefit of an apprentice or eligible
student, as applicable.
(iii) Costs of
classroom instruction and related expenses identified as costs for which the
taxpayer is responsible under an apprenticeship agreement, including, but not
limited to, tuition, fees, and books for college-level courses.
(g) "Resident" means that term as defined under section 18.
(h) "Youth apprenticeship program" means a
structured work-based learning program that is recognized by the department of
labor and economic opportunity that combines paid work experience with related
classroom instruction.