Michigan · research and development · MI-RD-001
Michigan Research and Development Credit
Publication revised September 24, 2026. Sourcebook page 147.
Credit amount / calculation
Small employer (<250 employees) generally 3% of Michigan qualified research expenses up to base plus 15% above base, capped at $250,000; larger-employer formula/cap differs; annual statewide cap and proration apply.
Business fit and eligible activity
New credit for tax years beginning in 2025; unusually useful to small manufacturers and flow-through employers conducting qualified Michigan research and development. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
A wood-products company can miss this credit by assuming that "research" means white coats and laboratories. In practice, qualifying work can arise in process engineering, product development, automation, drying, recovery, and software. A logging company has a narrower path, but equipment-control, software, or process-development work can sometimes qualify if it satisfies the same technical tests. This program also has an advance procedural step, so the technical work should not begin on the assumption that a later application will cure the timing issue. Page
Illustrative business benefit
A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 3%, the state credit would be about $6,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'
Timing / first action
Check application or certification requirements before incurring the qualifying expense or beginning the qualifying activity. For 2026 expenses, tentative claim due March 15, 2027.
Official sources
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