Short answer. Michigan's reinstated credit, effective for tax year 2025, is 3 percent of research spending up to a base, then 15 percent above the base for employers under 250 employees (10 percent and capped at $2 million for larger ones), plus 5 percent for research done with a Michigan university. It is refundable, but a $100 million statewide cap prorates claims when the pool is oversubscribed.
Key facts
| Rate (up to base) | 3% of Michigan QRE |
|---|---|
| Rate (above base) | 15% (under 250 employees) or 10% (250+, capped $2M) |
| University collaboration | +5% (capped $200,000) |
| Refundable | Yes |
| Statewide cap | $100M ($75M large / $25M small), prorated |
A size-tiered rate, refundable
Every employer earns 3 percent to the base; the rate above the base depends on headcount.
The base is your average annual Michigan qualifying research expenses for the three calendar years before the credit year. Up to that base, the rate is 3 percent. Above the base, a small employer (under 250 employees) earns 15 percent, and a large employer (250 or more) earns 10 percent, capped at $2 million per year.
The credit is refundable. It is claimed after your nonrefundable credits, and any amount beyond your tax is paid out. For a pre-profit software company with little Michigan tax, that is cash rather than a banked credit.
The university bonus
Research done with a Michigan university earns an extra slice.
Research performed with a Michigan research university under a written agreement earns an additional 5 percent, capped at $200,000 per taxpayer per year. It stacks on top of the size-tiered rate for the qualifying portion of the work.
The cap decides your real number
This is the rule that separates the formula from the payout.
Total credits are limited to $100 million statewide each year, split $75 million for large employers and $25 million for small. When a pool is oversubscribed, as it was for 2025, the Department of Treasury prorates every credit in that pool down, so the certified amount can be less than the formula produces.
You file a tentative claim with Treasury by April 1, and the credit is claimed under MCL 206.677 for corporate income tax filers or MCL 206.717 for flow-through entities. The credit was created by Public Acts 186 and 187 of 2024.
More on Michigan's R&D credit
The full state overview, the federal Section 41 work it builds on, and related state guides:
Sources
Every claim on this page traces to a primary authority. Each source below is independent and verifiable.
- Michigan Compiled Laws 206.677 (research and development credit) - Michigan Legislature
- Michigan Department of Treasury, Research and Development Tax Credit - Michigan Department of Treasury
- 26 U.S.C. ยง 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
Get documentation built to survive an exam
R&D Binder produces the federal Section 41 binder and the Michigan state workpaper from one engagement, both built to survive an exam.