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On october 7, 2025, governor gretchen whitmer signed into law hb 4961, which updates michigan's date of conformity to the internal revenue code (irc) and decouples from select federal tax changes enacted by the one big beautiful bill act (obbba) Our new analysis provides estimates of the costs of conformity to each provision by state, where possible, along with an analysis of the purpose and effects of each policy. 1 hb 4961 took effect immediately

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Michigan updates irc conformity to 2025, decoupling key provisions of the obbba, including r&e deductions, business interest limits and bonus depreciation. This decision requires businesses to balance federal benefits with state tax obligations. This amount will not vary in computing business income for federal and michigan tax purposes

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A taxpayer that did not elect and take a federal §179 expense deduction on its federal tax return may not claim the federal deduction in its computation of business income under the cit.

To help simplify your corporate tax planning strategy and reduce risk, our state tax experts have compiled each state’s specific bonus depreciation rules and how they conform to federal bonus depreciation laws. For purposes of the corporate income tax, michigan has adopted the provisions of the irc of 1986 in effect on january 1, 2018 or, at the option of the taxpayer, in effect for the tax year. Taxpayers should carefully consider conformity to sec Michigan initially conformed to aspects of this federal legislation but chose partial conformity to preserve state revenue stability