With clock ticking on 2025, Michigan officials eye biz incentives deal

Michigan lawmakers say economic development and regulatory reform are top policy priorities for the remainder of this year
Economic development will likely center around a new payroll tax plan that focuses on job creation before business incentives
Lawmakers took a regularly scheduled break in late November but only have a few days left in the legislative year to OK policy

LANSING — Reforming how Michigan handles economic development incentives and reviewing state regulations are among the top policy priorities for lawmakers in the final month of 2025.

The twin goals represent some common ground for House Republicans and Senate Democrats, who haven’t been able to find much agreement in a divided legislature this year.

There’s hope for a bipartisan breakthrough: Just before leaving the Capitol on Nov. 13 for a break, the House and Senate both unanimously passed bills requiring lawmakers to disclose ties to pet spending projects at least 45 days ahead of the state budget passing.

That was a top priority for House Speaker Matt Hall, R-Richland Township, who had vowed to block any Senate bills until Democrats agreed to significant earmark reforms.

Now, Hall and House Republicans are focusing on economic development after defunding Whitmer’s flagship corporate incentive program — the Strategic Outreach and Attraction Reserve (SOAR) Fund — in the new state budget.

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The Senate is also brainstorming new approaches to economic development, state Sen. Sam Singh told Bridge Michigan.

“Now that the budget is done, we should be looking at all those policies and seeing which ones we can get done by the end of the year and which ones can get done in the first quarter of next year,” said Singh, D-East Lansing.

In signing a roughly $81 billion state budget in early October, Whitmer’s office said she and legislative leaders had agreed to pass some sort of new economic development legislation by year’s end.

“We are proud of the shared commitment to passing bipartisan legislation before the end of this year that will make it easier to create and retain more good-paying, high-skill jobs in Michigan so we can continue to lead the future of advanced manufacturing,” her spokesperson said at the time.

State Sen. Sam Singh, D-East Lansing, said he believes Senate Democrats and House Republicans are able to agree on some version of a payroll tax credit but that conversations are still ongoing. (Simon Schuster/Bridge Michigan)

Hall, in a Nov. 11 interview with Bridge, said that in addition to economic development, House Republicans are also seeking to repeal various state regulations.

“Maybe economic development can be that spark that kind of creates an environment where we can move a lot of other bills once it’s done,” he said.

Both the Republican-led House and Democratic-led Senate took a regularly scheduled break in late November and are slated to return to Lansing this month.

Republicans roll out tax plan

Prior to the legislative break, House Republicans debuted a two-bill economic development plan focused on job creation and retention.

Under the plan — which Republicans are calling Real Jobs for Michigan — businesses could qualify for incentives if they create permanent, full-time jobs and pay at least 150% of the median hourly wage for whichever prosperity zone that business resides in.

In exchange for retaining those positions, businesses would be eligible for a payroll tax credit equal to 50% of the income tax withheld for each new employee.

Under the Real Jobs plan, all businesses could apply for the new tax credit program, which would be capped at $50 million a year and run through 2036. Of that $50 million figure:

$10 million would be reserved for businesses with 100 employees or fewer
$15 million would be reserved for businesses ranging between 100 and 999 employees
$25 million would be reserved for businesses with 1,000 employees or more

The House Republican’s Real Jobs plan would also seek to wind down tax credits issued under a defunct incentive program called the Michigan Economic Growth Authority.

Created under GOP Gov. John Engler, Democratic Gov. Jennifer Granholm significantly expanded the MEGA program in an attempt to keep General Motors, Ford Motor Co. and what’s now known as Stellantis – then Chrysler Corp. – in Michigan during the Great Recession.

Outstanding MEGA credits are expected to cost the state nearly $2.5 billion through the 2032 tax year.

State Rep. Mark Tisdel, a Rochester Hills Republican and a sponsor of the Real Jobs package, told Bridge the bills would refinance those remaining MEGA credits so that the tax obligations are paid out over a decade.

A consensus on the payroll tax

Singh, the East Lansing Democrat and Senate majority floor leader, said his chamber is not against the idea of a payroll tax break but would like to tackle the problem differently.

In June, he introduced a two–bill package to create what he’s calling the More Jobs for Michigan program.

Gretchen Whitmer state of the state — Gov. Gretchen Whitmer said during her 2025 State of the State that identifying and doing away with burdensome state regulations was a goal of hers. Lawmakers say it’s a place to find common ground in policy. (Simon Schuster/Bridge Michigan)

Unlike the Republican Real Jobs plan, Singh’s proposal would allow incentives for companies that create jobs at a certain percentage of an area’s median wage relative to the number of people a business employs. Smaller businesses would pay 175% of an area’s median wage; larger businesses would pay 150%.

It also requires businesses invest $100,000 per employee into site readiness within five years of landing in Michigan.

The bills have yet to receive a hearing since first sent to the Senate Committee on Government Operations, but Republican House Speaker Hall has already dismissed the effort, telling Bridge: “We’re not going to do his bills the way they’re structured.”

“They have ideas, we have ideas, the governor has ideas,” Hall said. “Once we kind of see a pathway, then I’ll get in the room with the governor and close the deal.”

Senate Majority Leader Winnie Brinks said that wherever the state lands on economic development, it needs to result in “solutions that are more than just job numbers.”

“We’re looking for careers with high wages that you can raise a family and buy a home with – jobs that come with insurance and benefits,” she said in a statement sent to Bridge, adding: “It’s not about just growing our state, it’s about growing the right way.”

Road ahead for regulatory reform

Whitmer made headlines in February when she emphasized the need for state agencies and lawmakers to work collaboratively in identifying overly burdensome or duplicative licensing and permit requirements.

“I can enact some of these changes alone, through executive action—and I will,” Whitmer said during her 2025 State of the State address. “But others require new state law.”

That same month, the Department of Licensing and Regulatory (LARA) released a report which included 80 recommendations department officials said would “make it easier for professionals… to earn and maintain their license to practice” a number of trades in Michigan.

Hall said House Republicans agreed with “about 70%” of the regulations targeted in the agency’s report, which proposes everything from letting boards meet remotely to eliminating duplicative exams for electrical contractors.

Senate Democrats are also “very open” to working with departments and the administration to find and remove unnecessary regulations from state law, Singh added, saying the idea was intertwined with economic development.

“If there are ways to streamline activities,” he said, “we want to do that.”