As Michigan continues to evolve into a hub for innovation and technology, the return of a state-level Research & Development (R&D) tax program is a significant development for businesses of all sizes. Michigan now offers a powerful R&D tax credit designed to reward businesses for investing in statewide R&D—bringing back an incentive that’s been absent for more than a decade—effective for tax years beginning on or after January 1, 2025.
In this guide, we’ll break down what the Michigan R&D tax credit is, who may qualify, how it works, and why it matters for Michigan companies focused on growth, innovation, and long-term competitiveness.
Michigan’s refundable R&D tax credit allows eligible businesses to claim a benefit based on Michigan qualified research expenses (MQREs). By reducing Michigan income tax and potentially generating a refund, the credit is intended to incentivize increased in-state research activity and investment in innovation. [1][2]
What sets this credit apart is its refundability. If the Michigan R&D tax credit exceeds your state income tax due, the excess may be refunded to you, effectively providing cash back rather than simply reducing taxes owed.[2][3]
Because the Michigan and federal R&D tax programs are separate, Michigan businesses may be able to claim both R&D tax credits.
Michigan taxpayers should evaluate their eligibility for each R&D tax program to maximize the combined financial advantage.
The Michigan R&D tax credit is available to:
Both the Michigan and federal R&D tax programs aren’t limited to a particular industry. Businesses in manufacturing, software, engineering, life sciences, and many other sectors may qualify, as long as their activities and expenses meet the requirements for qualified research. [3][4]
Michigan’s R&D tax credit generally follows the federal definition for qualified research under Internal Revenue Code (IRC) Section 41(b).
For Michigan’s R&D tax credit, however, the qualifying research activities must be conducted physically in Michigan, and only the associated MQREs can be included. [1][2]
These expenses typically include costs such as:
Michigan’s R&D credit uses a tiered structure based on company size:
The base amount is generally the average of qualifying R&D expenditure over the preceding three years. Newer companies with no Michigan qualifying R&D expenses in the lookback period may have a base amount of zero, meaning all qualifying expenses could be eligible for the greater credit rate. [3][4]
The R&D tax credit must be claimed after the taxpayer has claimed all nonrefundable credits.
Finally, the R&D tax program is subject to an annual statewide cap of $100 million in total credits (with proration if tentative claims exceed that amount).
Michigan also encourages partnerships between industry and academia. If your business conducts qualifying R&D in collaboration with a qualified Michigan research university, you may be eligible for an additional 5% tax credit on those expenses, up to $200,000 per year. [2][4]
Is Pre-Registration Necessary?
You do not need to pre-register with the Michigan Department of Treasury specifically to claim the R&D tax credit. However, you must be registered with the Treasury in general if you intend to file and ultimately claim the credit on your tax return. Registration with the Treasury is required before claiming the R&D tax credit, though not before submitting the R&D Credit Application itself. [5]
When Do Applications Open?
The R&D Credit Application must be submitted through Michigan Treasury Online (MTO), the state’s official online portal for business tax filings. The R&D Credit Application becomes available in MTO on January 1 following the calendar year in which the MQREs were incurred.
For example:
This delay gives companies time after year-end to finalize their expense reporting before applying.[5]
Where Do You File the Application?
All R&D Credit Applications must be submitted through MTO.
Here’s what you need to do: [5]
Important Deadlines
To take advantage of the Michigan R&D tax credit for 2025:
For 2026 and future years:
Missing this deadline could forfeit your ability to claim the credit, so proactive planning is key.
The return of the R&D tax credit signals Michigan’s commitment to economic competitiveness. By providing both state-level support for innovation and alignment with federal R&D tax incentives, businesses can meaningfully reduce their tax burden and reinvest in growth, technology development, and workforce expansion right here in the state.
Whether you’re developing new products, refining manufacturing processes, or improving software, understanding and claiming this credit could translate into significant tax savings and a stronger bottom line.
Optimize your tax strategy. Schedule a complimentary R&D consultation with Randy Eickhoff, CPA, Acena Consulting's Founder & Head Coach, for expert guidance.
Register for our free monthly webinar, next on March 17, 2026: Cracking the (Tax) Code for R&D.
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Edited by Laura Whittenburg, MSBME, Sr. Technical Writer at Acena Consulting. Photo courtesy of HarshLight on flickr.