FED BUSINESS INTEREST EXPENSE; UNITARY FILING                                S.B. 195 (S-1):

                                                                                                    SUMMARY OF BILL

                                                                                     REPORTED FROM COMMITTEE

Senate Bill 195 (Substitute S-1 as reported)

Sponsor:  Senator Aric Nesbitt

Committee:  Finance

CONTENT

The bill would amend the Income Tax Act to prescribe a formula that would apply, beginning with the 2021 year, for determining a person's Federal taxable income under the corporate income tax and for applying the business interest expense limitation under Federal tax, if the person were included in a unitary business group

MCL 206.691                                                                  Legislative Analyst:  Jeff Mann

FISCAL IMPACT

The bill would reduce State General Fund revenue by approximately $10.0 million per year, according to the Michigan Department of Treasury. The estimate is based on Federal data, but because there are differences between Federal and State rules and statute as to which members are included in unitary business groups, the estimate has a relatively large margin of error. The inclusion or exclusion of certain members relative to current law could reduce or increase tax liabilities, depending on the specific circumstances of the group members. The bill would affect only Corporate Income Tax revenue.

Date Completed:  2-22-22                                                       Fiscal Analyst:  David Zin

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.