MI HB5978

Establishes a 20% tax credit for qualified taxpayers on research and development expenses incurred in Michigan that exceed a baseline amount, for tax years 2025-2028, with a maximum credit of $5,000,000 per taxpayer per year.

Creates a 20% tax credit for qualified taxpayers on expenses for storage and maintenance of finished goods inventory, limited to $1,000,000 per taxpayer per year and only for businesses with less than $5,000,000 in annual gross revenue.

Limits total tax credits approved by the Michigan strategic fund to $100,000,000 annually for research and development credits and $25,000,000 annually for inventory storage credits across all taxpayers.

Restricts eligibility to businesses designated as primary defense contractors, aerospace defense manufacturers, or tier 1-3 aerospace and defense suppliers, as determined by the Michigan strategic fund.

Requires annual reporting by the department and Michigan strategic fund to the legislature detailing credit effectiveness, applicant numbers, and amounts awarded to each qualified taxpayer.