On July 22, 2026, Governor Whitmer signed three bipartisan bills, Senate Bills 721, 722, and 723, that expand Michigan’s brownfield and commercial redevelopment incentive programs. The new laws increase the amount of tax revenue under the Transformational Brownfield Program, make the program permanent, and expand eligibility, while also extending two commercial property tax incentive programs.
The changes may affect developers, businesses, and municipalities considering brownfield redevelopment, commercial rehabilitation, and other redevelopment projects in Michigan. Several new limits and requirements also apply, making early evaluation of the available incentives important when planning a project.
What Changed Under Michigan’s New Brownfield Laws?
Senate Bill 723 Expands the Transformational Brownfield Program
SB 723 makes significant changes to Michigan’s Transformational Brownfield Program. The program allows developers with qualifying redevelopment projects to capture certain state and local tax revenues generated by the project and use those revenues to reimburse eligible project costs.
SB 723 increases the statewide tax capture limit from $1.6 billion to $3.5 billion, removes the program’s 2027 expiration date, and expands the program to more communities across Michigan. The legislation also adds affordable housing requirements for certain residential projects and increases public accountability through a searchable project database and required annual milestones.
Senate Bills 721 and 722 Extend Commercial Property Tax Incentives
SB 721 and 722 extend two related programs, the Commercial Redevelopment Act and the Commercial Rehabilitation Act, which allow local governments to provide property tax incentives for eligible commercial rehabilitation and redevelopment projects. Without the extensions, those incentives would have expired. Businesses and municipalities currently using or considering these programs should take note of the extended timelines.
Key Tax Provisions to Watch
The expanded Transformational Brownfield Program includes several tax-related provisions that developers and businesses should consider when evaluating a project.
- Multiple Types of Tax Revenue Can Be Captured. Traditional brownfield plans generally allow developers to capture property tax revenues to reimburse eligible costs. Transformational Brownfield Plans can also allow the capture of certain sales taxes, use taxes, income tax withholding, and personal income taxes generated by qualified project activity. The increase in the sitewide cap to $3.5 billion expands the amount of tax capture available under the program.
- New Per-Project Limits Apply. SB 723 establishes limits on tax revenue that can be captured under an individual plan. No single plan may capture more than $300 million in total or more than $80 million in a single year. Developers should account for these limits when developing project financial projections and evaluating available incentives.
- A Standardized Accounting Method is Required. New projects must use a standardized “safe harbor” accounting method established by the Michigan Strategic Fund. Previously, use of this method was optional. Once adopted, the method cannot be changed without state approval. Developers should understand how the required methodology affects eligible costs and projected tax capture.
- Relocated Michigan Jobs Generally Do Not Qualify for Income Tax Capture. If a company moves employees from an existing Michigan location to a brownfield site, the income tax withholding attributed to those relocated employees cannot be captured. The provision is intended to distinguish new job creation from the relocation of existing Michigan jobs.
- Construction-Phase Tax Savings Are Subject to a Tighter Limit. Sales and use tax exemptions used during the construction period now count toward the $200 million construction-phase cap. Projects that anticipate significant construction-related tax savings should account for this limitation when developing project budgets.
- Special Benefit for Cultural Institutions. Arts and cultural organizations developing qualifying brownfield projects can capture 100% of employee withholding tax revenue for up to 10 years. This provision may be relevant for qualifying museums, theaters, cultural centers, and other arts and cultural projects.
- Large Projects Must Demonstrate Fiscal Impact. Projects costing $100 million or more must submit an analysis of their anticipated tax and economic benefits to the State. Developers pursuing large-scale projects should account for this additional requirement as part of the approval process.
- Commercial Property Tax Incentives Preserved. By extending the Commercial Redevelopment Act and Commercial Rehabilitation Act, SBs 721 and 722 allow local governments to continue providing property tax incentives for eligible commercial rehabilitation and redevelopment projects. These programs are separate from the Transformational Brownfield Program and remain potential tools for commercial projects that do not qualify for transformational brownfield incentives.
How Varnum Can Help
Varnum attorneys advise developers, businesses, and municipalities on brownfield redevelopment, commercial rehabilitation, and related tax and environmental matters. Our multidisciplinary approach brings together the tax, environmental, real estate, and business considerations involved in evaluating and structuring redevelopment incentives.
For assistance evaluating Michigan brownfield incentives, commercial redevelopment incentives, or a specific redevelopment project, contact a member of Varnum’s Tax or Environmental Practice Teams.
