Tax Incentives
A variety of special incentives may be available to your company, depending upon the nature of your investment and development plans and whether your business qualifies to receive tax exemptions, credits, grants, or other benefits.
Tax incentives are not used as a direct replacement of capital and don’t give money to the investor up front. Incentives provide new revenue into the City through the new investment or job creation and retention. It is a win-win proposition for the community and the business.
Our staff along with Michigan Economic Development Corporation (MEDC) staff - Cathi Cole will assess your business needs and match them with the appropriate state and local programs and as your project manager, will coordinate every component of the tax exemption and incentive programs.
Michigan’s New Tax Cuts
Michigan is replacing the Michigan Business Tax (MBT) in 2012 with a new, simpler and more competitive corporate income tax.
- Low tax rates will be established in Michigan. The new structure will tax C-Corporations at 6% on federal taxable income apportioned to Michigan. Other entities – individuals, partnerships, LLC’s, etc. – would have income flow to their personal income tax. The personal income tax rate will remain 4.35%, dropping to 4.25% in 2013.
- The change will reduce business taxes by an estimated 86%. All industries are in line for significant tax cuts, thus reducing operational costs and encouraging new investment in the State.
- Michigan’s overall business tax climate ranking is now 13th in the U.S., according to the Tax Foundation. In isolating the corporate tax rankings, the Foundation’s Michigan ranking jumps to 22nd from the previous level of 48th.
More information regarding Michigan’s New Tax structure.
Local Tax Incentives
If your business is considering an expansion or relocation project in the Sault your project may qualify for tax exemptions.
Sault EDC is the source for identifying which exemptions are available to you and for helping you to secure those exemptions. As a free and confidential service, staff will provide you the components and services you need as your direct liaison to the local community and state for these benefits.
INDUSTRIAL FACILITIES EXEMPTION
Under Michigan Public Act 198 (of 1974) manufactures may qualify for an Industrial Facilities Exemption Tax, providing a 50% reduction in real and personal property tax liability on the purchases of new or expanded buildings, new machinery and equipment, furniture and fixtures.
The Act allows for the local community, at the discretion of its governing body, to determine the length of years for which the IFT will be granted, up to a maximum of 12 years. The IFT applications, while subject to local approval, are made to the State Tax Commission, which makes final determination on the granting of an Exemption Certificate.
ECONOMICALLY DISTRESSED AND CORE COMMUNITIES EXEMPTION
Michigan’s PA 328 (of 1998) provides for a special class of communities, those that are defined as “Economically Distressed” and “Core Communities” to waive personal property taxes for new equipment that is purchased by eligible businesses. This Exemption of New Personal Property, just as with the other tax exemptions, is subject to local approval, applications are made to the State Tax Commission for final determination.
AIR AND WATER POLLUTION CONTROL TAX EXEMPTION
Public Act 451 (of 1994) established by Air Pollution Control and Water Pollution Control Tax Exemptions. Under this act, a manufacture may receive a tax exemption of 100% of the taxes on new air or water pollution control devices or systems that they purchase and install.
The exemption is available to the manufacturer for the life of the devises or systems. There is no local government approval necessary for this exemption. Applications are made to the Michigan Department of Treasury, but are reviewed by the Michigan Department of Environmental Quality. Exemption Certificates are granted only upon the MEDQ’s approval.
Michigan Economic Development Corporation
The Michigan Economic Development Corporation is the State’s central resource for businesses seeking to grow or locate in Michigan. MEDC staff is responsible for retention visits, staff will assess business needs, provide details on the services available through the programs of the MEDC and other state agencies, and address any concerns expressed by the business owner. These visits are made with Sault EDC staff and are coordinated by the MEDC.
The business attraction activities of the MEDC staff focus on target industries and pursue investment by select companies that would benefit from establishing a Michigan presence. Key to these efforts are the trade missions and industry expositions in which the MEDC participates, marketing the state as an ideal location for business and a wise investment decision for those looking to compete in the global economy. These activities are carried out in partnership with location economic development professionals such as Sault EDC staff and other economic development organizations statewide.
For more information visit the MEDC website: www.michiganadvantage.org