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MichiganHB 49612025-2026 Regular SessionHouseWALLET

Individual income tax: income; treatment of certain provisions under the internal revenue code and revenue distributions; modify. Amends secs. 12, 30, 36, 607, 695 & 805 of 1967 PA 281 (MCL 206.12 et seq.) & repeals sec. 51d of 1967 PA 281 (MCL 206.51d). TIE BAR WITH: HB 4183'25, HB 4951'25, HB 4968'25Last Action: assigned PA 24'25 with immediate effect

Sponsored By: Ann Bollin (Republican)

Became Law

Individual income tax: incomeIndividual income tax: deductionsIndividual income tax: flow-through entitiesIndividual income tax: administrationCorporate income tax: business incomeCorporate income tax: flow-through entitiesCorporate income tax: administrationIndividual income tax: retirement or pension benefitsCorporate income tax: revenue distributionIndividual income tax: revenue distributions

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Bill Overview

Analyzed Economic Effects

14 provisions identified: 8 benefits, 2 costs, 4 mixed.

Big deductions for retirees and seniors

You can deduct up to $42,240 of retirement or pension income on a single return, or $84,480 on a joint return. These limits are indexed after 2008. Seniors can also deduct up to $9,420 (single) or $18,840 (joint) of interest, dividends, and capital gains. Amounts must be in your AGI and are reduced by other retirement deductions. The senior investment income deduction is not available to people born after 1945.

Deduct gambling losses in Michigan

For tax years beginning on and after January 1, 2021, you can deduct wagering losses on your Michigan return if you deducted them on your federal return. If you are a nonresident, you can only deduct losses from Michigan casinos or licensed race meetings. Nonresident losses cannot exceed gambling gains allocated to Michigan. The deduction follows the federal wagering loss limits.

First-time home buyer deduction

For tax years starting in 2022 through 2026, you can deduct contributions to a Michigan first-time home buyer savings account. Subtract qualified withdrawals first. The yearly limit is $5,000 on a single return or $10,000 on a joint return. Interest and qualified distributions can also be deducted as provided. Nonqualified withdrawals are added back up to prior deducted amounts.

Lower taxes on tips and overtime

For tax years starting after December 31, 2025 and before January 1, 2029, you can deduct qualified tips and qualified overtime on your Michigan return. The deduction equals the amounts you also claim on your federal return. If you live outside Michigan, you can only deduct the part from work done in Michigan. This lowers state taxable income during those years.

Student loan relief for disabled veterans

For tax years beginning on or after January 1, 2025, disabled veterans can deduct student loan amounts canceled under the federal total and permanent disability program. The discharged amount must be reported on Form 1099‑C and included in your federal AGI. You must be found permanently and totally disabled or unemployable by the U.S. Department of Veterans Affairs.

Tax break for college savings

You can deduct contributions to a Michigan education savings account each year. First subtract any qualified withdrawals made that year. The limit is $5,000 on a single return or $10,000 on a joint return. Interest and qualified distributions included in AGI are also deductible to the extent tied to deductible contributions. Nonqualified withdrawals are added back up to what you deducted before.

Tax deduction for ABLE savings

You can deduct contributions to a Michigan ABLE account each year. Subtract qualified withdrawals first. The limit is $5,000 on a single return or $10,000 on a joint return, figured per account. Interest and qualified distributions in AGI are deductible if tied to deductible contributions. If you make nonqualified withdrawals, you must add back up to what you deducted.

Tax relief for resident tribal members

If you are an enrolled member of a federally recognized tribe and live in the agreement area, you can deduct your nonbusiness income. Your tribe must have a section 30c agreement with Michigan that is in full force. You can deduct the amount included in your AGI during the period the agreement applies.

Oil and gas income and expenses removed

Michigan takes both oil and gas production income and the related production expenses out of the state tax calculation. This applies to amounts included in or deducted in arriving at your federal AGI. For estates and trusts, this rule applies for tax years beginning after December 31, 2011. Your Michigan tax can go up or down depending on your mix of income and expenses.

How Michigan spends income tax money

The state sets a schedule for where individual income tax revenue goes. For FY 2022–23 and 2023–24, up to $1.2 billion goes to the general fund first, then up to $50 million to the housing and community development fund, then other listed funds. Different deposit amounts apply for FY 2024–25 through 2028–29. A continuing schedule begins in FY 2029–30. Any remaining balance goes to the general fund.

Michigan decouples from some federal rules

Starting with tax years that begin after December 31, 2024, Michigan computes individual AGI and resident estate and trust taxable income as if certain later federal rules did not apply. The state ignores post‑2024 changes tied to bonus depreciation, research costs, and business interest (sections 163(j), 168(k), 168(n), 174, 174A, and 179 as of December 31, 2024). This can raise Michigan taxable income even if your federal income is lower. For tax years beginning after December 31, 2021, Michigan also does not apply the federal transition rules in Public Law 119‑21 section 70302. The treasurer may update cross‑references as needed.

New corporate tax base and entity rules

For tax years that begin after December 31, 2024, Michigan computes corporate taxable income as if certain later federal rules on bonus depreciation, research costs, and business interest did not apply. This can raise Michigan corporate taxable income. For earlier years, Michigan does not apply certain federal transition rules. The law also sets how S corporations and partnerships are treated for insurance‑tax calculations, classifying them as corporations in that part.

You can choose the federal code year

Michigan uses the U.S. Internal Revenue Code as of January 1, 2025 by default. You may elect to use the version of the federal code that applies to your tax year instead. Your choice decides which federal rules flow into your Michigan taxes.

One income tax section repealed

Section 51d of the Michigan Income Tax Act is repealed on September 30, 2025. After that date, the section no longer applies. Any effects depend on what that section previously required or allowed.

Sponsors & Cosponsors

Sponsor

  • Ann Bollin

    Republican • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 219 • No: 25

Senate vote • 10/3/2025

PASSED; GIVEN IMMEDIATE EFFECT

Yes: 22 • No: 14 • Other: 1

House vote • 10/3/2025

Senate amendment(s) concurred in

Yes: 102 • No: 7 • Other: 1

House vote • 9/25/2025

passed; given immediate effect

Yes: 95 • No: 4 • Other: 11

Actions Timeline

  1. assigned PA 24'25 with immediate effect

    10/8/2025House

  2. filed with Secretary of State 10/07/2025 01:34 PM

    10/8/2025House

  3. approved by the Governor 10/07/2025 12:18 PM

    10/8/2025House

  4. presented to the Governor 10/06/2025 03:06 PM

    10/7/2025House

  5. bill ordered enrolled

    10/3/2025House

  6. full title agreed to

    10/3/2025House

  7. Senate amendment(s) concurred in Roll Call #248 Yeas 102 Nays 7 Excused 0 Not Voting 1

    10/3/2025

  8. rule suspended

    10/3/2025House

  9. laid over one day under the rules

    10/3/2025House

  10. returned from Senate with amendment(s) with immediate effect and full title

    10/3/2025House

  11. RETURNED TO HOUSE

    10/3/2025House

  12. INSERTED FULL TITLE

    10/3/2025Senate

  13. PASSED; GIVEN IMMEDIATE EFFECT ROLL CALL # 262 YEAS 22 NAYS 14 EXCUSED 1 NOT VOTING 0

    10/3/2025Senate

  14. AMENDMENT(S) DEFEATED

    10/3/2025Senate

  15. PLACED ON IMMEDIATE PASSAGE

    10/3/2025Senate

  16. RULES SUSPENDED

    10/3/2025Senate

  17. PLACED ON ORDER OF THIRD READING WITH AMENDMENT(S)

    10/2/2025Senate

  18. AMENDMENT(S) CONCURRED IN

    10/2/2025Senate

  19. REPORTED BY COMMITTEE OF THE WHOLE FAVORABLY WITH AMENDMENT(S)

    10/2/2025Senate

  20. REFERRED TO COMMITTEE OF THE WHOLE

    9/29/2025Senate

  21. RULES SUSPENDED

    9/29/2025Senate

  22. PASSED BY HOUSE WITH IMMEDIATE EFFECT

    9/29/2025House

  23. transmitted

    9/25/2025House

  24. title amended

    9/25/2025House

  25. passed; given immediate effect Roll Call #233 Yeas 95 Nays 4 Excused 0 Not Voting 11

    9/25/2025House

Bill Text

  • Public Act

    10/7/2025

    PDF

  • As Passed by the Senate

    10/3/2025

    PDF

  • House Concurred

    10/3/2025

    PDF

  • As Passed by the House

    9/25/2025

    PDF

  • Introduced

    9/16/2025

    PDF

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