Incentives & Taxes

Michigan Business Development Program (MBDP)

The Michigan Business Development Program is an incentive program available from the Michigan Strategic Fund (MSF), in cooperation with the Michigan Economic Development Corporation (MEDC). The program is designed to provide grants, loans or other economic assistance to businesses for highly competitive projects in Michigan that create jobs and/or provide investment.

Community Revitalization Fund

The Michigan Community Revitalization Program (MCRP) is designed to promote community revitalization that will accelerate private investment in areas of historical declining values, foster redevelopment of functionally obsolete or historic properties, reduce blight, and protect natural resources of this state. MCRP provides gap financing through loans, grants, or other economic assistance.

Community Development Block Grant (CDBG)

The Community Development Block Grant (CDBG) program is a federal grant program utilizing funds received from the US Department of Housing and Urban Development (HUD). Each year, Michigan receives approximately $30 million in federal CDBG funds, out of which various projects are funding through the state.

Industrial Property Tax Abatement (PA 198)

Industrial property tax abatements provide incentives for eligible businesses to make new investments in Michigan. These abatements encourage Michigan manufacturers to build new plants, expand existing plants or renovate aging plants. High technology operations are also eligible for the abatement.

Michigan Business Growth Fund Loan Participation Program

The Michigan Loan Participation Program participates with lenders to finance diversification projects when faced with eligible borrower companies whose projected cash flows are considered speculative by the lender.

Brownfield Redevelopment Authority (PA 381)

Brownfield Redevelopment Authority (BRA) can be used to develop and implement Brownfield projects. A BRA is a resource that may use Tax Increment Financing (TIF) as a tool for property redevelopment.

Michigan Collateral Support Program

The Michigan Collateral Support Program supplies cash collateral accounts to lending institutions to enhance the collateral coverage of borrowers. To qualify, a business must be engaged with a private lender for the purpose of acquiring a commercial extension of commercial credit and must exhibit a collateral shortfall according to the lender’s analysis.

Personal Property Tax Relief in Distressed Communities (PA 328)

Personal Property Tax Relief in Distressed Communities allows distressed communities, county seats, and certain border county communities to abate personal property taxes on new investments made by eligible businesses.

State Essential Services Assessment (SESA) Exemption Program

Under the State Essential Services Assessment (SESA) Exemption Program, companies may qualify for an exemption when investing more than $25 million in personal property. SESA exemptions are equal to 100% or 50% of the SESA amount for a period of years, depending on eligibility and a review of the investment.

Capital Access Program

The Capital Access Program (CAP) gives banks a flexible tool to make business loans to Michigan based companies. The Michigan Economic Development Corporation (MEDC) contributes a small amount of “gap financing” to provide Michigan businesses access to capital that otherwise might not be available, making it possible for the company to receive fixed asset and working capital financing.

SBA Certified Development Loans

The U.S. Small Business Administration's (SBA) program provides small- and medium-sized businesses with long-term fixed rate financing for the acquisition or construction of fixed assets. Businesses must have a tangible net worth of less than $7.5 million and an average net profit of less than $2.5 million for the past two years.

Michigan Emerging Technologies Fund

The Emerging Technologies Fund, administered by the Michigan Small Business Development Center (MI-SBDC) for the Michigan Economic Development Corporation, is dedicated to match federal Small Business Innovation Research and Small Business Technology Transfer Research SBIR/STTR funding opportunities for exceptional research and technical innovation generated in Michigan.

Private Activity Bonds

Private activity bonds are an attractive source of financial assistance to economic development projects in Michigan. They provide profitable firms with capital cost savings stemming from the difference between taxable and tax-exempt interest rates. Download our factsheet for more information.

Personal Income Tax

4.25%

Michigan’s personal income tax system consists of a flat rate of 4.25% of an individual's or household's income.

Corporate Income Tax

6%/4.25%

Michigan’s corporate income tax system consists of a flat rate of 6% of taxable income of firms structured as C corporations. Income for other business entities flows through to the owners’ personal income taxes and is taxed at a flat income tax rate of 4.25%.

Sales and Use Taxes

6%

Michigan levies a 6% general sales and use tax on purchases by consumers on tangible goods. Businesses pay the same 6% sales/use tax rate when purchasing consumer goods.

Real Property Taxes

$52.65 per $1,000 (average) 5.27% (average)

Michigan's 2017 average non-homestead property tax rate was 52.65 mills, or $52.65 per $1,000 of assessed property, with real and personal property subject to taxation at 50% of current market value. Michigan began phasing out its Personal Property Taxes for most businesses beginning in 2014. Businesses claiming the personal property tax exemption will instead be subject to a statewide special assessment, ranging from 0.9 to 2.4 mills, to fund essential services levied by local governments.

Benefit

Financial assistance is available to help offset the cost of redeveloping contaminated, blighted or functionally obsolete property. Utilizing tax increment financing, which captures the new property taxes generated by a development project, a business can be reimbursed on a dollar for dollar basis over time for certain Eligible Activities. Eligible Activities may include environmental site assessment & remediation, demolition, lead & asbestos abatement, site preparation and public infrastructure improvements.

Eligibility (not comprehensive)

Property must be contaminated, blighted, functionally obsolete, or owned by the Land Bank.
Additional Brownfield Redevelopment information available through the following State agencies:

• Michigan Department of Environmental Quality
• Michigan Economic Development Corporation

Benefit

Industrial property tax abatements provide incentives for Michigan manufacturers to build new plants, expand existing plants, renovate aging plants or add new machinery and equipment. Also eligible for the abatement are high-technology operations defined as advanced computing, advanced materials, biotechnology, electronic device technology, engineering or laboratory testing, medical device technology, product research and development and advanced vehicles technology.

Eligibility (not comprehensive)

Each municipality may have their own policy and terms for the length of the abatement. Each municipality may have their own policy and terms for the length of the abatement.

Benefit

This abatement allows distressed communities, county seats and certain border county communities to abate personal property taxes by the full millage rate on new investments made by eligible businesses.

Eligibility (not comprehensive)

Cities, villages and townships that contain distressed areas (as defined under the Michigan State Housing Development Authority Act), and all county seats (as defined under the Neighborhood Enterprise Zone Act) are eligible to participate.

Benefit

To retain the current workforce, the Michigan Works! program offers several workforce assistance programs, including Employee Enhancement Training, through the Incumbent Worker Program. This program allows companies to spend up to $3,500 to train each employee, depending on the training program.

Eligibility (not comprehensive)

Services include screening and hiring services, on-the-job training funds, Worker Opportunity Tax Credits and ongoing training strategies. Past training programs have included computer skills, LEAN manufacturing, ISO and trade apprenticeships.

Benefit

Consumers Energy – Substantial business energy savings rebates are available for achieving energy efficiencies.

Eligibility (not comprehensive)

Eligibility depends on the location and service provider.

This grant-funded program at WMU is designed to create more energy efficient and environmentally benign processes in order to enhance productivity and increase output of manufacturers. The team assigned to the initiative includes engineering students who provide the actual assessment and recommendations.

Procurement Technical Assistance Centers (PTACs) of Michigan are your first step in getting government contracts and can assist your company throughout the entire process from start to finish: registering to become a government contract, identifying bid opportunities, walking you through and simplifying the bidding process, helping you to expedite payments through electronic invoicing and even helping you post award with the evaluation of contract awards.

The information provided above is only a summary of the most current information available. The Marshall Economic Development Alliance, Southwest Michigan First nor their affiliates assume any liability for its use in legal, tax, accounting or other professional matters. Please consult a tax specialist when considering all business ventures.