LANSING, Michigan — Governor Gretchen Whitmer, J.D. has signed legislation that will provide a powerful boost to businesses: a new Research and Development (R&D) tax credit. This potentially refundable tax credit, effective for tax years beginning on or after January 1, 2025, was implemented to incentivize innovation and invigorate the job market in the state of Michigan.

While eligible businesses should still claim the R&D tax credit at the federal level, this state-level tax credit provides further incentives to offset qualified research expenses incurred within the state. These expenses may include wages, supplies, and costs for contract research.

Michigan businesses should know the R&D tax credit’s key features:

• Refundable credit: A company with zero tax liability may still receive a cash refund for qualified research expenses (QREs) incurred in the state if and only if the taxpayer’s non-refundable credits were fully utilized during the tax year, and the state's annual caps were not exceeded.
• Small-business focus: Smaller companies enjoy a greater credit rate, rendering the R&D credit especially helpful to small businesses and startups.
  • Businesses with fewer than 250 employees are eligible for a 15% credit, capped annually at $250,000.
  • Businesses with more than or equal to 250 employees are eligible for a 10% credit, capped annually at $2 million.

• Incentivized collaboration: Businesses that partner with Michigan’s research universities can receive an additional 5% credit, capped annually at $200,000.

About Acena Consulting

Acena Consulting is a multidimensional tax consultancy specializing in R&D tax credits. Our approach is hands-on, conservative, and technically driven, and our experienced team of tax professionals includes former Big Four national office partners, CPAs, and engineers.

We will provide peace of mind – keeping you informed of all tax deadlines and updates – and promise accelerated, accurate, and timely delivery of your documentation.

• Receive free, immediate assistance: schedule your consultation today with Randy Eickhoff, CPA, Founder & Head Coach at Acena Consulting.

• Interested in building your professional fluency in R&D tax incentives?

  • Sign up for our free, interactive webinar on April 22: “Cracking the (Tax) Code for R&D.”

    • This workshop provides one CPE credit for professionals keeping up with continuing education.

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Photo courtesy of kevin dooley on Flickr.