MMA Tax Strategy Resources
As policymakers sought to find revenue sources to fund road and infrastructure improvement during the Fiscal Year 2025-26 budget process, several laws were passed that will impact manufacturers as they file their 2025 tax returns.
Decoupling
Employers will face higher than expected state taxes because Michigan’s tax code was “decoupled” from the federal tax cuts in the One Big Beautiful Bill Act passed earlier in 2025. The move will limit access to the expanded federal deductions taken by every other state on Michigan tax returns for such items as Research as Research & Development (R&D) expenses for 2022, 2023 and 2024, section 179 expensing, expensing, new production property deductions, business deductions, business interest deductions and other expenses.
While policymakers faced difficult choices, MMA fought to protect job providers and Michigan’s economy. Decoupling is projected to result in a $2 billion tax increase on businesses over the next five years.
Resources
New R&D Tax Credit
2026 is the first year to file for the new MMA-driven R&D tax credit which took effect for the 2025 tax year. There are unique and critical dates for taxpayers to meet this year. To qualify for the credit, claimants must file a tentative claim (“unadjusted credit amount”) by the statutory deadline of 4/1/26, for credits claimed based on expenses incurred during the 2025 calendar year.
The early “tentative claim” date is set because the law requires Treasury to pro-rate claims if the claims exceed the annual $100 million cap. Treasury will issue a notice of any required adjustment to the allowed credit based on the pro-ration process. The agency is working on issuing a Revenue Administrative Bulletin for the R&D tax credit, with input from MMA.
Resources
Contact Mike Johnston
Executive Vice President of
Government Affairs & Workforce Development
Call 517-487-8554
E-mail johnston@mimfg.org