Treasury and research council outline Michigan tax shifts, revenue trends and revenue drivers

Chief Deputy Treasurer Jeff Guilfoyle told the Senate Committee on Finance, Insurance and Consumer Protection on Oct. 12, 2025 that Michigan’s major tax changes over the last two decades include the 2011 replacement of the Michigan Business Tax with a corporate income tax (CIT), the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair that enabled collection from remote sellers, and more recent new excises on marijuana and expanded gambling.

Guilfoyle said the corporate income tax “is a 6% tax on corporations at c corporations.” He described the 2011 change from the Michigan Business Tax (MBT) to the CIT as a large revenue reduction, saying the switch “did lower tax revenues by about $1,600,000,000 in 02/2011.” He also noted that state CIT receipts have grown sharply in recent years, reporting that the CIT raised about $2,200,000,000 in 2022 and that the state saw a more-than-$1 billion increase in CIT receipts between 2019 and 2022.

The Treasury presentation summarized other major shifts: a 10-year phase-out beginning in 2012 that largely exempted manufacturing personal property from local property taxes; a small-business personal property exemption of up to $180,000; a now-regular stream of remote-seller sales tax revenue after Wayfair that Guilfoyle said yields “close to a billion dollars a year from remote sellers”; and new excise and sales taxes on recreational marijuana that Guilfoyle said are forecast to generate $332,000,000 for fiscal 2025 and currently produce about $80,000,000 per quarter in tax revenue.

Guilfoyle also reviewed gambling taxes, saying 2019 changes legalized sports betting and iGaming for Detroit casinos and participating tribes. He quoted figures for adjusted gross receipts and taxes, stating iGaming adjusted gross receipts of $2,200,000,000 and sports betting dollars of $194,000,000, and he summarized tax flows that direct the bulk of gaming tax dollars to the state school aid fund and related regulatory and prevention funds.

On federal tax changes, Guilfoyle flagged the 2017 Tax Cuts and Jobs Act and noted that many of its individual provisions are scheduled to sunset after tax year 2025; he warned the committee that federal changes could materially affect Michigan because the state’s individual and corporate bases “start with the federal base.” He also described recent state-level moves: restoration of sizable retirement income exemptions (cited as Public Act 4 in Guilfoyle’s remarks) and an expansion of the state Earned Income Tax Credit pickup (the working families tax credit) to 30% of the federal EITC under recent legislation.

Presenters and the Citizens Research Council of Michigan (CRC) also showed how Michigan’s overall tax position has changed. CRC President Eric Looper told the committee, “we’re a 501(c)(3) nonprofit that does government policy research,” and his colleague summarized revenue mixes and interstate comparisons. CRC senior research associate Bob Schneider highlighted that Michigan’s state revenue remains concentrated in two sources: the personal income tax and the 6% sales tax. He said that, historically, Michigan moved from one of the higher-tax states in 1979 toward a lower ranking by 2021: “If you go back to 1979, Michigan ranked ninth on that measure... In 2021, we ranked 30 third,” Schneider said, summarizing Census-based comparisons of state and local taxes per capita and as a share of personal income.

Both presenters emphasized business-tax trends. Guilfoyle and CRC data showed that business taxes as a share of state and local taxes declined substantially after the MBT-to-CIT change; CRC noted that business taxes as a share of private gross domestic product fell from about 4.6% to 3.4%, a drop that CRC said ties Michigan with Indiana for one of the lowest effective business tax burdens among states. Treasury staff and CRC also cautioned that the narrower CIT base (limited to C corporations) makes corporate tax receipts more volatile and vulnerable to economic downturns.

Committee members asked officials for additional, follow-up detail — for example, which cities levy local income taxes (Guilfoyle and Looper said about two dozen cities do, with Detroit and a small group of cities imposing higher rates), and for interstate comparisons on iGaming and sports-betting tax rates. Guilfoyle offered to provide further rate comparisons and other details on request.

Votes and formal actions taken during the session were procedural: the committee recorded a motion to excuse absent members (moved by Chairwoman Kavanaugh; carried without objection) and a roll-call vote to adopt committee rules (moved by Senator Irwin; result: 7 yeas, 0 nays). No tax bills, ordinances or regulatory changes were voted on during this hearing.

The presentations provided the committee with a compact reference of historic policy changes, current revenue drivers and data on how Michigan compares with peer states on tax burden and business taxation, and committee members requested follow-up analysis on several comparative points and on distributional effects of the state tax mix.