Tax breaks for: Businesses
Has Michigan got a deal for you
Click on any of the categories below to see how many tax breaks are out there, and how much they cost the state treasury. The numbers were taken from the state's executive budget for 2013 and 2014.
| Type of tax | Category | 2014 tax break value | Description |
|---|---|---|---|
| Federal Adjustments | Employer Contributions to Insurance | $883,178,000 | Exempts employer payments for employee medical insurance from taxation. Also exempts employer payments for life insurance premiums on the first $50,000 of life insurance. |
| Federal Adjustments | Employer Pension Plans | $603,404,000 | Exempts employer payments into qualified employee pension plans from taxation |
| Michigan Business Tax Certificated Credits | Michigan Economic Growth Authority (MEGA) | $245,000,000 | Provides numerous credits for new or expanding firms based on additional payroll and health care costs or additional business activity costs associated with an expansion or new location |
| Property and Other Local Tax Expenditures | Homestead Exemption for Farm Property | $160,000,000 | Exempts qualified agricultural property from local school operating mills. The estimate includes all property classified as agricultural, including houses |
| Federal Adjustments | Accelerated Depreciation | $79,644,000 | When a person buys property to be used in a business or to earn rent and the property has a useful life of more than one year, the cost of the property is typically depreciated over its expected life. For tax purposes, a person may deduct depreciation at an accelerated rate. The federal tax expenditure estimate for depreciation now compares tax law depreciation with the estimated economic depreciation adjusted for inflation. |
| Sales and Use Tax Expenditures | Gratuity and Tips | $66,860,000 | Excludes a separately billed and itemized gratuity or tip from a retailer’s gross proceeds. |
| Sales and Use Tax Expenditures | Bad Debts | $65,700,000 | Effective January 1, 1984, a retailer is allowed to deduct the amount of bad debts related to previously reported, taxable retail sales at the time that these debts become worthless or uncollectible. |
| Property and Other Local Tax Expenditures | Railroad Right of Way/Broadband Credit | $51,000,000 | Public Act 50 of 2002 provides a credit for the state utility property tax for a company that installs telecommunications equipment with information carrying capability exceeding 200 kilobits per second in both directions. This credit was intended to accelerate the introduction of broadband Internet access to Michigan. Provides a credit to railroad companies for maintaining or improving certain rolling stock and rights-of-way in Michigan. |
| Sales and Use Tax Expenditures | Collection Fee | $46,600,000 | Sales and use tax returns are due by the 20th of the month for sales made the previous month. A seller may retain 0.75 percent of the tax (not to exceed $20,000) if proceeds are remitted by the 12th of the month, or 0.50 percent of the tax (not to exceed $15,000) if proceeds are remitted from the 13th through the 20th of the month. |
| Sales and Use Tax Expenditures | Communication and Telephone Exemption | $37,000,000 | Exempts communications and telephone service from coin-operated installations, switchboards, concentrator identifiers, and interoffice circuitry and their accessories for telephone answering services and directory advertising proceeds. |
| Sales and Use Tax Expenditures | Interstate Trucks and Trailers | $28,310,000 | Exempts purchases of qualified trucks and their trailers (and parts affixed to them) by interstate motor carriers from sales and use tax. An exemption based on out-of-state usage would lower the tax expenditure to $12,000,000 |
| Insurance Company | Michigan Association and Facilities Credit | $27,400,000 | Provides a credit for payments made to the Michigan workers’compensation placement facility, the Michigan basic property insurance association, the Michigan automobile insurance placement facility, the property and casualty guaranty association, and the life and health guaranty association |
| Sales and Use Tax Expenditures | Cargo Aircraft | $22,940,000 | Exempts from use tax aircraft owned by an air carrier certified by the United States Department of Transportation and used solely for the transport of air cargo. |
| Sales and Use Tax Expenditures | Vending Machines and Mobile Facilities | $21,837,000 | Exempts the portion of gross proceeds representing commissions paid to an entity otherwise exempt from the sales tax where the gross proceeds are from certain non-electric vending machines where consideration is 10 cents or less. Also exempts sales of nonalcoholic beverages, and items sold near room temperature from a mobile facility or vending machine. |
| Sales and Use Tax Expenditures | Employee Meals | $17,210,000 | Exempts meals provided by employers to their employees starting in 2002 |
| Sales and Use Tax Expenditures | Telephone Services | $14,070,000 | Exempts tangible personal property located on the premises of the subscriber and central office equipment or wireless equipment directly used in transmitting, receiving, or switching, or in the monitoring or switching of a two-way interactive device. |
| Tobacco Products Tax | Licensee Expenses | $13,270,000 | Exempts 1.5 percent of the cigarette tax due from licensees, and 1.0 percent of the tax on other tobacco products, to cover their expenses in administering the tax. |
| Motor Fuel Taxes | Public Vehicles | $13,090,000 | Exempts fuel purchased for motor vehicles owned or leased by state, federal, or local governments from motor fuel taxes. |
| Motor Fuel Taxes | Evaporation and Loss Allowance | $12,520,000 | The 2 percent evaporation and loss allowance was replaced in 1997 by a 1.5 percent allowance for the collection of fuel taxes. |
| Property and Other Local Tax Expenditures | Obsolete Property Rehabilitation | $11,500,000 | Under the Obsolete Property Rehabilitation Act (OPRA), commercial buildings in qualified local governmental units may be granted an OPRA abatement certificate, which results in reduced property taxes on the increased value of renovated and redeveloped facilities. |
| Corporate Income Tax | Small Business Alternate Tax Credit | $10,200,000 | For qualifying smaller firms, provides a credit that effectively lowers the taxpayer’s tax to 1.8 percent of adjusted business income. Qualifications include: Gross receipts must be less than or equal to $20 million (the credit is phased out for firms with gross receipts between $19 million and $20 million). Total adjusted business income may not exceed $1.3 million. Allocated business income limit for any one owner may not exceed $180,000 (with a credit phase-out between $160,000 and $180,000). |
| Insurance Company | Disability Insurance Exclusion | $9,300,000 | Exempts the first $190,000,000 of disability insurance premiums written in Michigan. |
| Sales and Use Tax Expenditures | Aircraft Parts | $7,110,000 | Exempts sales of parts and materials affixed in Michigan to passenger, cartage, and certain other aircraft from tax. |
| Motor Fuel Taxes | Diesel Fuel for Jobsites and Charter Firms | $5,450,000 | |
| Michigan Business Tax Certificated Credits | Film Credits | $5,000,000 | Provides credits for film production expenditures made after February 2008. To be eligible for the credit, companies must enter into an agreement with the Michigan film office. The MBT provides a 40 to 42 percent direct production expenditure and 30 percent qualified personnel expenditures film production credit; a 25 percent investment film infrastructure credit. |
| Sales and Use Tax Expenditures | Radio and TV | $4,400,000 | Exempts sales to persons licensed to operate commercial radio or television stations when the property is used as a component of a film, tape, or recording produced for resale or transmission. |
| Sales and Use Tax Expenditures | Commercial Domestic Aircraft | $4,000,000 | Exempts from use tax aircraft owned by domestic passenger carriers if the aircraft is used primarily in regular commercial passenger transportation |
| Aviation Gasoline and Marine Fuel | Interstate Flight Refund | $3,200,000 | Airlines that operate scheduled interstate flights receive a refund of 1.5 cents per gallon of aviation fuel used. |
| Insurance Company | Michigan Examination Fees Credit | $3,000,000 | Allows an insurance company to claim a credit equal to 50 percent of the examination fees paid by the company during the year under section 224 of the insurance code" |
| Sales and Use Tax Expenditures | Rail Rolling Stock | $1,630,000 | Exempts rail rolling stock and selected other related equipment, material, and supplies from sales and use taxes |
| Sales and Use Tax Expenditures | Returned Vehicles | $1,100,000 | Exempts from gross proceeds “a refund less an allowance” for motor vehicle buybacks by manufacturers under provisions of the lemon law. |
| Motor Fuel Taxes | Fuel for Off Road Use | $1,100,000 | Exempts fuel purchased for motor vehicles used exclusively on nonpublic roads. |
| Motor Fuel Taxes | Municipal Franchise Vehicles | $430,000 | Refunds gasoline tax to persons operating passenger vehicles under a municipal franchise, license, permit, agreement or grant, such as taxi cabs. |
| Tobacco Products Tax | Bad Debt Deduction | $400,000 | Allows cigarette wholesalers to deduct any losses from bad debts |
| Sales and Use Tax Expenditures | Driver Training | $201,000 | Exempts property used for demonstration or driver training programs |
| Alcoholic Beverages Taxes | Small Brewer’s Credit | $90,000 | Allows brewers who produce less than 50,000 barrels annually to apply for a $2 per barrel credit on the first 30,000 barrels produced. |
| Sales and Use Tax Expenditures | Commercial Vessels | Exempts sales of commercial vessels of 500 tons or more when purchased on special order. Also exempts bunker and galley fuel, provisions, supplies, maintenance and repairs for the exclusive use of such vessels engaged in interstate commerce. | |
| Sales and Use Tax Expenditures | Sales of Business | Excludes from the use tax non-inventoried property purchased as part of a business. | |
| Motor Fuel Taxes | Diesel Fuel for Railroads | Exempts diesel fuel used by railroad locomotives from motor fuel taxes. | |
| Motor Vehicles Registration Fee | Intercity Commercial Buses | Intercity commercial buses pay a registration fee of $25 rather than a tax based on weight. | |
| City Income Tax | Net Profits of Financial Institutions | Net Profits of Financial Institutions n.a. Exempts net profits of financial institutions and insurance companies from the city income tax. No statewide estimate is available. |
In some cases, the state does not estimate the value of a tax break, leaving the tax break value empty in its tables.
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