HOUSE BILL NO. 6262

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

(MCL 206.1 to 206.847) by adding sections 277 and 677.

the people of the state of michigan enact:

Sec. 277. (1) Subject to the limitations under this section, beginning on and after January 1, 2023, a qualified taxpayer may claim a credit against the tax imposed by this part equal to 50% of the amount paid on a qualified student loan by the qualified taxpayer on behalf of a qualified employee during the tax year. The maximum credit allowed under this section for payments made on behalf of each qualified employee per tax year is $1,800.00 and a qualified taxpayer shall not claim a credit for more than 20 qualified employees in a single tax year.

(2) To be eligible for the credit under this section, the qualified taxpayer must submit an application to the department. The application must include, at a minimum, all of the following information:

(a) The name and address of the employer.

(b) The total number of employees of the employer.

(c) The number of qualified employees for whom qualified student loan repayments will be made in the tax year for which a credit is sought under this section.

(d) The amount of the qualified student loan repayments anticipated to be made for each qualified employee.

(e) The total amount of credits sought under this section for the tax year.

(f) Any other documentation required by the department.

(3) If the department determines that the employer qualifies for tax credit under this section, the department shall approve the application, authorize tentative tax credits to the employer within the limits set forth in subsection (1), and issue a written certification to the employer that designates the employer as a qualified taxpayer and certifies the amount of tentative tax credits approved to that qualified taxpayer. The department shall consider applications in the order in which they are received and may approve up to an aggregate of $1,500,000.00 in tax credits under this section and section 677 in any calendar year. At least 25% of the credits approved in any calendar year must go to qualified taxpayers that have no more than 30 employees.

(4) For a qualified taxpayer who is a member of a flow-through entity that voluntarily provides paid adoption leave to its employees, that qualified taxpayer may claim credit against the member's tax liability under this part based on the member's distributive share of business income reported from that flow-through entity or an alternative method approved by the department.

(5) The qualified taxpayer shall attach a copy of the certificate with the annual return filed under this part for the same tax year in which a credit is claimed under this section for payments made during the tax year for qualified student loans, but a qualified taxpayer shall not claim more than what is approved and certified by the department.

(6) If the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first.

(7) On or before July 1, 2024, and on or before July 1 of each year thereafter, the department shall electronically submit an annual report to the governor, the clerk of the house of representatives, and the secretary of the senate concerning the operation and effectiveness of the credit under this section and section 677. The report shall include all of the following for credits claimed under this section and section 677:

(a) The total number of employers receiving tax credits.

(b) The total amount of student loan repayments made on behalf of qualified employees.

(c) The total amount of tax credits claimed by qualified taxpayers.

(d) The total number of qualified employees for whom qualified student loan repayments have been made.

(e) Of the total amount of qualified employees reported under subdivision (d), the number of those employees who, as of the most recently completed tax year, pay income taxes under this part to this state.

(8) The department may request information from qualified taxpayers as necessary to fulfill the reporting requirements of subsection (7).

(9) As used in this section:

(a) "Approved postsecondary educational institution" means any of the following:

(i) A college, university, community college, or junior college described in section 4, 5, or 6 of article VIII of the state constitution of 1963 or established under section 7 of article VIII of the state constitution of 1963.

(ii) An independent nonprofit college or university located in this state.

(b) "Qualified employee" means an individual who satisfies each of the following:

(i) Has been employed by the qualified taxpayer for at least 480 hours during the tax year.

(ii) Received a degree from an approved postsecondary educational institution after January 1, 2023.

(iii) Incurred a qualified student loan while attending a postsecondary educational institution.

(c) "Qualified student loan" means any state or federal loans incurred to attend and receive a degree from an approved postsecondary educational institution, including, but not limited to, state loans authorized under the higher education loan authority act, 1975 PA 222, MCL 390.1151 to 390.1165, and federal loans authorized under the higher education act of 1965, Public Law 89-329, 20 USC 1001 to 1161aa-1.

(d) "Qualified taxpayer" means a taxpayer that is an employer that is physically located in this state and employs 1 or more qualified employees.

Sec. 677. (1) Subject to the limitations under this section, beginning on and after January 1, 2023, a qualified taxpayer may claim a credit against the tax imposed by this part equal to 50% of the amount paid on a qualified student loan by the qualified taxpayer on behalf of a qualified employee during the tax year. The maximum credit allowed under this section for payments made on behalf of each qualified employee per tax year is $1,800.00 and a qualified taxpayer shall not claim a credit for more than 20 qualified employees in a single tax year.

(2) To be eligible for the credit under this section, the qualified taxpayer must submit an application to the department. The application must include, at a minimum, all of the following information:

(a) The name and address of the employer.

(b) The total number of employees of the employer.

(c) The number of qualified employees for whom qualified student loan repayments will be made in the tax year for which a credit is sought under this section.

(d) The amount of the qualified student loan repayments anticipated to be made for each qualified employee.

(e) The total amount of credits sought under this section for the tax year.

(f) Any other documentation required by the department.

(3) If the department determines that the employer qualifies for tax credit under this section, the department shall approve the application, authorize tentative tax credits to the employer within the limits set forth in subsection (1), and issue a written certification to the employer that designates the employer as a qualified taxpayer and certifies the amount of tentative tax credits approved to that qualified taxpayer. The department shall consider applications in the order in which they are received and may approve up to an aggregate of $1,500,000.00 in tax credits under this section and section 277 in any calendar year. At least 25% of the credits approved in any calendar year must go to qualified taxpayers that have no more than 30 employees.

(4) The qualified taxpayer shall attach a copy of the certificate with the annual return filed under this part for the same tax year in which a credit is claimed under this section for payments made during the tax year for qualified student loans, but a qualified taxpayer shall not claim more than what is approved and certified by the department.

(5) If the credit allowed under this section for the tax year and any unused carryforward of the credit allowed by this section exceed the qualified taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first.

(6) The department may request information from qualified taxpayers as necessary to fulfill the reporting requirements of section 277(7).

(7) As used in this section:

(a) "Approved postsecondary educational institution" means any of the following:

(i) A college, university, community college, or junior college described in section 4, 5, or 6 of article VIII of the state constitution of 1963 or established under section 7 of article VIII of the state constitution of 1963.

(ii) An independent nonprofit college or university located in this state.

(b) "Qualified employee" means an individual who satisfies each of the following:

(i) Has been employed by the qualified taxpayer for at least 480 hours during the tax year.

(ii) Received a degree from an approved postsecondary educational institution after January 1, 2023.

(iii) Incurred a qualified student loan while attending a postsecondary educational institution.

(c) "Qualified student loan" means any state or federal loans incurred to attend and receive a degree from an approved postsecondary educational institution, including, but not limited to, state loans authorized under the higher education loan authority act, 1975 PA 222, MCL 390.1151 to 390.1165, and federal loans authorized under the higher education act of 1965, Public Law 89-329, 20 USC 1001 to 1161aa-1.

(d) "Qualified taxpayer" means a taxpayer that is an employer that is physically located in this state and employs 1 or more qualified employees.