State R&D Tax Credits

State R&D Tax Credits


Credit Name: 208.1405 Taxpayer’s research and development expenses; modified by Act No. 39 of 2011 (House Bill 4362)

Expiration Date: None for C-corps, 12/31/2011 for passthrough organizations with no “Certificated credit

Does it apply to C corps and pass-through entities?: Yes for tax years beginning before 12/31/2011, C-corps only after 1/1/2012

Credit Carry forward: Yes for all corporations prior to 12/31/2011, entities paying CIT only after 1/1/2012.

Description: Taxpayer may claim a credit against the tax imposed by this act equal to 1.90% of the taxpayer’s research and development expenses in this state in the tax year. The definition of qualified research mirrors the Federal definition.

Other Notes: The credit under this section combined with the total combined credit allowed under section 403 shall not exceed 65% of the tax liability imposed under this act before the imposition and levy of the surcharge under section 281. The credit may only be applied against MBT, with the switch to CIT as of 1/1/2012, the credit has been effectively revoked for any passthough organization (S-Corp, LLC, and partnerships) as they do not pay CIT. Certain exemptions for passthrough companies exist, and if the company has a “Certificated Credit” they can file CIT and therefore continue to take advantage of the Research Credit. (See Michigan Legislature HB 4362 for further details.)

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