Base Amount Transition Rule: Expense Years 2025 - 2027

For Research and Development (R&D) Tax Credit calculations based on Michigan Qualified R&D Expenses (MQREs) incurred in expense years 2025 through 2027 (i.e., the calendar years when the MQREs were incurred), fiscal-year Corporate Income Tax (CIT) filers may convert their prior fiscal-year MQREs into calendar-year equivalents when calculating base amount years before 2025.

This special rule:

• Applies only to base amount calculations before 2025, and
• Is not available for credits claimed for expense year 2028 or later.

The conversion of fiscal year MQREs to align with the calendar year is based on the number of months in the fiscal year that fall within each associated calendar year.

The following examples show how fiscal-year MQREs are converted and applied to specific calendar years when calculating the base amount under the transition rule.