Bill > HB4603

This bill introduces a new pay ratio surcharge for corporate income tax in Michigan, targeting companies required to disclose their pay ratio under Securities and Exchange Commission (SEC) regulations. The surcharge, which will take effect in tax years beginning after October 1, 2025, imposes additional taxes on corporations based on the compensation gap between their top executive and median employee. The surcharge ranges from 0% to 50%, depending on the pay ratio: for companies with a pay ratio of 50:1 or less, no additional tax is imposed, while companies with a pay ratio of 500:1 or higher would face a 50% surcharge on their tax liability. The bill applies to companies that must file SEC pay ratio disclosures, and if a company fails to properly disclose its pay ratio, the state tax department can determine the ratio and calculate the appropriate surcharge. For unitary business groups, the surcharge applies if any member of the group is required to make a pay ratio disclosure. The surcharge is treated as part of the regular corporate income tax and will be administered and collected using existing tax collection mechanisms.

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https://legislature.mi.gov/Bills/Bill?ObjectName=2025-HB-4603