Great Lakes Wire

Michigan lawmakers have voted to separate the state's tax code from several federal tax reforms included in the One Big Beautiful Bill Act (OBBBA). This legislative move, finalized during budget negotiations, is expected to raise state tax bills for Michigan businesses and create additional administrative requirements.

The OBBBA was enacted at the federal level with the aim of enhancing U.S. competitiveness by supporting business expansion, reshoring operations, and investing in workers. However, with the passage of HB 4961, Michigan will not adopt certain pro-growth provisions into its own tax code. As a result, businesses in Michigan will be unable to use these federal provisions when calculating their taxable income and liability for state taxes.

While some have suggested that this change only represents a temporary timing difference in tax calculations, the Michigan Chamber of Commerce disagrees. The organization states that unless there are changes to Michigan law, "this decoupling is permanent, leaving Michigan companies paying higher state taxes while competitors in neighboring states continue to benefit from these reforms."

The Michigan Chamber of Commerce has announced it is assessing whether legislators might reconsider and restore alignment with federal tax reforms so that employers in the state can benefit as well. The Chamber also communicated its position clearly: "We’re also making clear to policymakers that this move represents a permanent tax increase on businesses in our state and a step backward for Michigan’s economy and prosperity."

For further information or questions about this issue, Randy Gross at the Michigan Chamber can be contacted.