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Michigan’s research and development (R&D) tax credit historically has closely followed the federal R&D tax credit. If a company qualified for the federal credit, then it would qualify for the Michigan credit. However, the R&D activities and expenditures must have occurred within the state of Michigan. The current credit equals 1.9% of Michigan QREs, is limited to 75% of a taxpayer's tax liability, and is claimed on Form 4570, Part 4.
Lawmakers continue to introduce legislation that would reinstate the Michigan R&D Tax Credit. Currently under bipartisan consideration at the capitol building (January 2022), H.B. 5601 would permit innovating companies to claim a 15% credit on the state’s corporate income tax. Specifically directed at the advanced automotive, semiconductor, and life sciences industries, H.B. 5601 would place Michigan innovators who are involved in improving products and processes ahead of the competition.
State lawmakers acknowledge that the proposed bill may have unintended consequences on Michigan’s state budget. Additional proposals include capping the amount of R&D Tax Credits for the state on an annual basis. Lawmakers are also concerned about equitable R&D access for small and startup life science companies. Stay tuned to see if Michigan lawmakers pass a final, updated version of an R&D bill.
Learn more about Michigan's R&D Tax Credit law here.
R&D Tax Credit Available:
Yes
Eligible Entities:
C-Corporations, S-Corporations, LLCs, Partnerships
Deadline for Tax Filing:
Due with Michigan Tax Return
Data Required to Compute Credit:
Claim Period Qualified R&D Expenses (QREs)
Credit Carryforward:
None
To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.
Download our R&D Tax Credit Calculator for Android to see how much you can receive from your qualified R&D tax credit expenses.
The Michigan R&D tax credit is 3% of R&D expenses up to the base amount plus 10% above for large businesses (cap $2 million), or 3% up to base plus 15% above for small businesses (<250 employees, cap $250,000), with an additional $200,000 for university collaborations and $100 million state cap. Contact Strike Tax to maximize your savings.
Activities must meet federal IRC § 41 criteria and be conducted in Michigan, including product development or process improvement, with base as average of prior three years' R&D expenses. Strike Tax can identify qualifying projects.
Yes, startups with <250 employees qualify for the 15% rate, plus federal payroll tax offsets up to $500,000 per year for up to five years if gross receipts are under $5 million. Strike Tax can guide eligibility.
Maintain contemporaneous records like project descriptions, time tracking, wage allocations, and expense logs. For 2025, Form 6765 requires Section G for business component details on claims over $10,000. Strike Tax ensures audit-ready documentation.
File a tentative claim with the Michigan Department of Treasury by April 1, 2026 for 2025 expenses, then claim on your tax return. For federal, file Form 6765. Strike Tax streamlines the process.
New credit effective January 1, 2025, with $100 million cap and university bonus; federally, Form 6765 adds Section G, and Section 174 restores full expensing. Strike Tax can help navigate these updates.
