Comparing Economic Development Bills: Why SBAM Prefers the House’s Version
November 20, 2025
Article written by SBAM’s Advocacy Team
The Michigan legislature is currently on break and is set to return the first week of December. With only 7 scheduled session days remaining on the 2025 calendar, lawmakers have committed to making economic development a top priority before year end.
The FY 26 budget made substantial cuts to the state’s primary economic attraction tool, the Strategic Outreach and Attraction Reserve (SOAR) Fund. Lawmakers have agreed to work on something, but with split control of the legislature, there are differing opinions on which path is the best way forward.
Legislation has been introduced in both the House and Senate to revive an old program, once called Good Jobs for Michigan, which acts as an income tax capture device, allowing businesses to capture a portion of the income tax withheld for new employees who are paid above a certain wage level. Each chamber has their own vision for the future of this program, but both prefer the tax capture mechanism of Good Jobs to the upfront cash-for-jobs strategy utilized by previous programs, like SOAR.
Both packages employ different approaches and target different parts of the economy while using Prosperity Region median wage as a benchmark for wage levels of eligible jobs, read more here.
Between both approaches, SBAM supports House Bill 5293. The House’s approach aligns with SBAM’s policy positions on Taxation and Economic Development by ensuring the credits are available to small and large-sized business, alike. The Senate proposal (SB 473) includes floor of 25 new jobs to qualify for any tax capture. The vast majority of small businesses cannot support adding 25 new high-wage employees at a time and are thus disqualified from consideration for this credit. Small businesses account for over half of the private sector employment in Michigan, and we believe that incentivizing growth only for large businesses is not a comprehensive economic development strategy.
Additionally, the rigorous and complex MEDC grant application process is overly burdensome for small employers, who lack the resources to ensure they remain compliant. SBAM prefers an approach administered automatically through the Department of Treasury that allows businesses guaranteed benefit if they meet the requirements. Administration through these means ensures that the state isn’t responsible for picking “winners and losers” or to invest in the “next big thing.” Employment and economic growth do not come from one sector, and encouraging growth across the board and in businesses of all sizes ensures a diverse and robust economy, built to withstand economic headwinds.
| SB 473: More Jobs for Michigan | HB 5293: Real Jobs Tax Credit |
| Requires jobs paying 175% of median wage for lowest tier | Requires jobs paying 150% of median wage for all tiers |
| Lowest tier applies to 25 newly created jobs | Lowest tier applies to 1 or more created jobs |
| Administered by the MEDC | Administered by the Department of Treasury |
| Allows 100% tax capture | Allows 50% tax capture |
| Creates generous provisions for mega projects (3,000+ created jobs) | Similar benefits for all businesses, with different dollar cap for each size |
| Grant-like application with credit lasting up to 10 to 30 years, depending on business size | Businesses apply yearly for credit through Treasury up to 10 years of tax capture per new job |
| No determined expenditure or tax revenue loss | Specifically funds $50 million per year |
Senate Bill 473: More Jobs for Michigan Program
- Incentive tiers reward major job creation and investment projects of various sizes.
- The first tier applies to new facilities creating at least 25 jobs paying 175% of the regional median wage (or 135% in smaller counties) and allows an employer to capture 100% of the income tax withholdings for these new employees for ten years.
- The second tier targets projects with 250 certified jobs at 150% of the median wage and allows an employer to capture 100% of the income tax withholdings for these new employees for ten years.
- The third tier requires 1,000 new jobs at 150% plus over $1 billion in facility investment. and allows an employer to capture 100% of the income tax withholdings for these new employees for ten years.
- At the highest level, projects creating 3,000 certified jobs at 150% and investing $20 billion qualify for maximum benefits and allows an employer to capture 100% of the income tax withholdings for these new employees for thirty years.
- Additionally, a separate provision offers tax incentives for retaining at-risk headquarters jobs, requiring $100,000 in-state investment per protected job, with 100% withholding tax capture for twenty years.
- Fund administration is handled by the Michigan Economic Development Corporation (MEDC) through the strategic fund. Qualifying businesses must submit an application and attain approval from the MEDC.
- Program cost is not clearly outlined. There will not be money that goes from the general fund to businesses, because the mechanism of the credit allows businesses to keep withheld taxes from employees’ state income tax, rather than pay them to the state.
House Bill 5293: Real Jobs Tax Credit
- Incentive tiers distribute $50 million annually to businesses, broken up in three tiers of business size. Each of these employers can capture 50% of the income tax withheld for created jobs.
- $25 million for large employers (1,000 employees)
- $15 million for medium employers (100 – 999 employees)
- $10 million for small employers (99 or fewer employees)
- Fund administration is handled by the Department of Treasury.
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