Updates About Revenue Reports

Following the recently announced executive recommendations, House Republican Appropriation Subcommittee chairs were given budget targets for Fiscal Year 2027. Although House Appropriations Committee Chairwoman Ann Bollin (R-Brighton) did not outline specific numbers, she did share that the highest budget threshold goal is lower than what we saw in the previous budget. House Republicans say they plan to address the projected $800 million January CREC shortfall without raising taxes. Representative Bollin said GOP priorities for the upcoming budget include strengthening Michigan’s businesses and improving the education system, while cutting spending where possible. Republicans also signaled they will push back against any proposals that increase taxes.

Prior to this report, Republican House Speaker Matt Hall (Richland) announced a new 6% sales tax proposal on select services that is projected to garner $4.73 billion for the state. His proposal applies to certain services usually popular with tourists and wealthier residents. Among the services included in the tax proposal are country club memberships, travel agencies, newspaper publishing, performing arts, political advertising, environmental consulting, and recreational activities such as skiing and golf. Speaker Hall stated that his proposal is not aimed at working class families and instead targets out of state visitors.

The proposal is intended to offset Hall’s proposed property tax cuts that currently generate about $5 billion in revenue. Overall, his tax plan would result in approximately a $270 million net tax cut.

The Senate Fiscal Agency recently released the monthly revenue report for December 2025. The report detailed that tax collections were $2.9 billion, $328.6 million below the expected number and 6.5% lower than December 2024.

Corporate Income Tax (CIT) collections came in $48.3 million higher than predicted, and net income tax revenue was also $13.8 million above expectations. Despite these higher amounts, lower revenue from Individual Income Tax (IIT) withholding and sales taxes, along with higher Michigan Business Tax (MBT) refunds, significantly outweighed the gains from the CIT and income tax. The largest contributor to the lower overall total was MBT collections, as refunds far outpaced payments, resulting in collections of $394.2 million compared to a projected negative $70.0 million. It’s important to note that MBT refunds are usually processed in large groups and typically get processed in January; however, this Fiscal Year they were processed in December, contributing to the large difference between projected and actual refund amounts.

So far, the year-to-date actual revenue compared to predicted for both the General Fund (GF) and School Aid Fund are down. The GF is below expectations by $178.1 million whereas the School Aid Fund is down by $13.0 million.

Revenue collections from major taxes and lottery were slightly higher than expected for November, according to a recent November Revenue Report released by the Senate Fiscal Agency (SFA). Compared to November last year, the revenue totals reached $3.0 billion and are up 3%. Revenue from the State Education Tax (SET), individual income tax (IIT) withholding, and Michigan Business Tax (MBT) all came in higher than expected. Net income tax revenue and sales tax revenue were also elevated compared to last year, up 8.3% and 3.6%, respectively. However, net revenue from the repealed Single Business Tax, Michigan Business Tax, and Corporate Income Tax (CIT) collections were collectively 47% lower than last November.

Still, collections to the General Fund came in $95.8 million over expectations. The School Aid Fund also came in at $44.1 million above projections. Because November is the first month for tax collection for the fiscal year, these figures also represent the year-to-date actual vs predicted revenue.