Capitol News

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 move, passed through House Bill 4961 during final budget negotiations, is expected to increase state tax bills for Michigan businesses and create new administrative challenges.

The OBBBA was designed to help U.S. companies expand, reshore operations, and invest in their workforce. By decoupling from these federal provisions, Michigan businesses will no longer be able to use certain pro-growth measures when calculating their taxable income and liability at the state level.

Some supporters of the decision suggest that the impact is only temporary. However, others argue that unless Michigan law changes again, this separation will be permanent. As a result, Michigan companies may face higher state taxes compared to competitors in neighboring states who continue to benefit from the federal reforms.

The Michigan Chamber of Commerce has stated it is considering options to encourage lawmakers to restore alignment with the federal tax code. The organization is also communicating its position that this change amounts to a permanent tax increase on local businesses and could negatively affect Michigan’s economic growth.

For more information or questions about these changes, contact Randy Gross at the Michigan Chamber of Commerce.