About a year ago, Gov. Gretchen Whitmer called on Michigan lawmakers to create a research and development tax credit for businesses and a new fund to support start-up companies in the state. On Monday, her wish came true.
Whitmer signed into law House Bills 5100 and 5101 to create the R&D tax credit. She also added her signature to House Bills 5651, 5652 and 5653 to launch a new innovation fund aimed at providing early-stage capital to start-ups. In her State of the State address last year, Whitmer called both policy proposals a way to upgrade the state’s economic development toolkit.
She signed the legislation at Newlab at Michigan Central, home to over 130 start-up businesses according to Michigan Central Chief Operating Officer Carolina Pluszczynski.
“Both tools will help us grow our economy, create good-paying Michigan jobs and lead the future,” Whitmer said of the tax credit and innovation fund.
Gov. Gretchen Whitmer speaks at a bill signing ceremony in Detroit Monday, January 13, 2025, at Michigan Central’s Newlab where she added her signature to legislation to create a research and development tax credit and innovation fund.
Under the R&D tax credit law, the Michigan Department of Treasury could award up to $100 million in total credits in a year. Michigan joins 36 other states that offer businesses the tax credit, according to KBKG, a tax services company. The bills received bipartisan support in the Michigan House of Representatives but passed on a party-line vote in the Michigan Senate against GOP opposition.
The current state budget already set aside $60 million for the innovation fund program approved by Whitmer to enable state economic development officials to give grants to venture capital funds and start-up support services with the goal of keeping and attracting more young companies in Michigan. The legislation passed with bipartisan support. Lawmakers supporting the policy characterized it as a way to support entrepreneurship in the state.
State Rep. Alabas Farhat, D-Dearborn, who sponsored the innovation fund legislation said the program will help Michigan retain early-stage businesses. “We had Republicans and Democrats coming together to address the very real issue that Michigan entrepreneurs are leaving our state. They’re leaving it and it’s causing a brain drain,” he said.
Lt. Gov. Garlin Gilchrist II — a former entrepreneur — said he might not have left the state after graduating from the University of Michigan had there existed a more robust infrastructure for innovators at the time.
“This is a landmark moment in the history of this state. The future is bright,” said University of Michigan President Santa Ono who predicted innovation fund in particular would keep start-ups and graduating students in Michigan at the bill signing event.
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Whitmer said the new fund should be cause for celebration for Michigan taxpayers. “When we invest in an entrepreneur and their business makes money and creates jobs, it’s the people of Michigan who benefit,” she said.
Spokespeople for Republican legislative leaders did not immediately respond to requests for comment.
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Whitmer did not see other economic development measures she’s championed cross the finish line at the end of the last legislative session. Lawmakers didn’t send to her desk legislation to reduce payroll taxes for companies creating jobs in the state. They also didn’t extend funding for a corporate subsidy program touted by Whitmer that has provided public funding to companies to create new electric vehicle jobs in the state.
In the final week of last year’s legislative session, Whitmer threatened to withhold her signature on bills if lawmakers didn’t send road funding legislation and economic development policies her way, an official familiar with the negotiations not authorized to speak publicly on the matter said at the time. While Whitmer received some but not all of the policies she hoped for on economic development, lawmakers did not send any road funding measure her way.
Whitmer told reporters that she’s planning to talk more about the need for long-term need for road funding Wednesday, saying only that she’s hoping lawmakers will deliver on that front without providing specifics.
Contact Clara Hendrickson at chendrickson@freepress.com or 313-296-5743.
This article originally appeared on Detroit Free Press: Whitmer signs Michigan business tax credit, innovation fund