Short answer. You can claim both. Michigan enacted a new research credit for tax years beginning in 2025, computed on your Michigan research at 3 percent up to a base plus 10 or 15 percent above it depending on company size, separate from the federal Section 41 credit. The Michigan credit is refundable, so the excess is paid as cash, while the federal credit is not refundable for most filers.
Key facts
| Claim both? | Yes, on the same Michigan research |
|---|---|
| Federal rate | 20% regular / 14% ASC |
| Michigan rate | 3% up to a base, then 10% (250+ employees) or 15% (under 250) above |
| Michigan refundable? | Yes, the excess is paid as cash |
| Forms | Form 6765 (federal) + a Michigan tentative claim via Michigan Treasury Online |
A new state credit alongside the federal one
Michigan computes its own credit on Michigan expenses; the federal credit runs on your nationwide expenses.
The federal Section 41 credit is claimed on Form 6765 with your federal return. Michigan's new credit, effective for tax years beginning in 2025, is claimed through a tentative claim filed with Michigan Treasury Online and then on the return. The same research performed in Michigan can support both.
Michigan uses the federal Section 41(b) definition of qualified research expenses but applies its own rates to the Michigan portion, so the federal work is the basis for the state claim.
Federal Section 41 vs. Michigan, factor by factor
Michigan's new credit is refundable but capped statewide and claimed by advance application.
| Factor | Federal Section 41 | Michigan |
|---|---|---|
| What it is | Credit for increasing research activities | Michigan research and development credit (new for 2025) |
| Credit rate | 20% regular / 14% ASC | 3% up to a base, plus 10% (250+ employees) or 15% (under 250) above; plus 5% for university research |
| Refundable | No - a QSB may offset up to $500,000 of payroll tax under Section 41(h) | Yes, the excess over tax is refunded |
| Carryforward | 20 years, with a 1-year carryback | Not applicable; the excess is refunded rather than carried |
| Where research must occur | United States | Michigan only |
| How you claim it | Form 6765 with the federal return | File a tentative claim through Michigan Treasury Online, then claim on the return |
| Claim alongside the other? | Yes, on the same underlying QRE | Yes, on the same underlying QRE |
| Documentation | Four-part test and QRE substantiation (Treas. Reg. 1.41-4) | Uses the Section 41(b) definition, Michigan research only |
Where Michigan differs from federal
Two features define the new Michigan credit.
New, refundable, and capped. The Michigan credit took effect for tax years beginning in 2025. It is refundable, so a company with little Michigan tax can receive the excess as cash, but the program has a $100 million statewide annual cap split between large and small employers, and claims that exceed a pool are prorated.
Claim by advance application. Unlike the federal credit, which you claim on your return, Michigan requires a tentative claim filed through Michigan Treasury Online by an early deadline, using actual expenses. The federal credit is not refundable, though a qualified small business can offset up to $500,000 of payroll tax under Section 41(h).
One evidence base for both
The records that prove the federal claim are what Michigan relies on too.
Because Michigan keys its credit to the federal Section 41(b) definition of qualified research expenses, the four-part test analysis and the wage, contractor, and supply records that substantiate your federal credit under Treas. Reg. 1.41-4 are the same records Michigan relies on, limited to the in-state share.
R&D Binder documents the federal Section 41 four-part test that both credits stand on, with Michigan handled as a state add-on from the same evidence. Whether your facts qualify, and which credits to claim, is a determination for your CPA.
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. § 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
- IRS, About Form 6765 - Internal Revenue Service
- Treas. Reg. § 1.41-4 (recordkeeping and substantiation of qualified research) - 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.