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Key Takeaways 

• Synergy is described as a collaborative process where resources and efforts are combined to achieve common goals. 
• FI Group has developed a comprehensive methodology that combines strategic consulting with dynamic operational management, offering tailored solutions. 
• The company offers comprehensive support during finance-related tax audits, allowing organizations to focus on turning innovative ideas into reality. 
• By collaborating with FI Group, companies can gain a substantial competitive advantage, with a particular focus on R&D solutions 
• FI Group is ISO 27001 certified, ensuring the security of client information, as well as being compliant with the EU General Data Protection Regulation 

First, what’s synergy about?  

Synergy is the collaborative process in which resources and efforts are pooled across individuals, departments, and/or organizations to achieve common goals. This involves bringing together multiple technologies, operational efficiencies, and areas of expertise to leverage their collective strengths.  

By working together, these entities can improve decision-making processes and develop innovative solutions to the challenges they face: the result is substantial value creation that benefits all parties involved, fostering a more effective and productive environment.  

Through this, organizations can leverage their combined capabilities to drive growth and achieve results that would be difficult to achieve individually. 

FI Group’s Strategic Synergy 

At FI Group, we have meticulously crafted a comprehensive methodology that combines strategic consulting with dynamic operational project management. Our unique approach is purpose-built to significantly increase your potential for success amidst the challenges of today’s competitive business environment. We recognize that every organization has distinct needs, which is why we offer customized solutions specifically designed to align with your individual goals and the diverse requirements of various funding programs and tax incentives (including R&D Tax Credits). 

Exploring our range of services can serve as a reliable and effective foundation for your innovation projects. We are committed to not only facilitating progress but also ensuring that you achieve the desired results. By partnering with us, your company can enjoy a substantial competitive advantage, empowering your business to thrive in the ever-evolving marketplace. 

Our methodology gives you the freedom to innovate, allowing you to elevate your company’s performance and expand your creative capabilities. Throughout the entire lifecycle of your projects, we will be by your side, emphasizing security, transparency, and reliability in every interaction. 

In addition, we are aware of the intricate challenges that can arise during tax audits related to financing or tax incentives. Our expertise extends to providing comprehensive support during these audits, allowing you to focus entirely on your core mission: transforming your innovative ideas into tangible reality. With FI Group, you can navigate the complexities of tax incentives with confidence, ensuring that your projects not only move forward but also achieve lasting success. 

Why Choose Us? 

FI Group is a global company present in 13 countries across 4 continents, with a network of 34 offices. Our core values are integrity, professionalism, and empathy toward all our clients and partners. We are dedicated to excellence in providing customized R&D solutions. Here are some reasons why you might want to learn more about us and consider working with us:  

• Expertise in R&D Tax Credits: We provide exceptional expertise in R&D tax credits, supported by a highly qualified team with a proven track record of success. 
• Time-Saving Solutions: Partnering with us will save you time by streamlining the process of identifying and maximizing R&D tax credit opportunities for your clients. 
• Audit Support: Our team offers comprehensive audit support, providing peace of mind and expert guidance throughout the audit process. 
• Data Security: We proudly hold ISO 27001 certification, ensuring the security of our clients’ information. Additionally, we comply with the EU General Data Protection Regulation (GDPR) 2016/679. 

We are committed to delivering the best results for your clients by maximizing cost-effective R&D solutions across all industries.

Michigan’s new R&D credit

Michigan’s research and development (R&D) tax credit historically has closely followed the federal R&D tax credit. If a company qualified for the federal credit, then it would qualify for the Michigan credit. However, the R&D activities and expenditures must have occurred within the state of Michigan.

Effective for tax years beginning on or after January 1, 2025, an authorized business may claim a credit with a rate based on the number of employees:

• Business with 250 or more employees: Amount equal to the sum of 3% of the QREs incurred during the year up to the base amount plus 10% of the QREs incurred during the year in excess of the base amount. The credit amount must not exceed $2,000,000.00 per tax year per employer.
• Business with less than 250 employees: Amount equal to the sum of 3% of the QREs incurred during the calendar year up to the base amount plus 15% of the QREs incurred during the calendar year in excess of the base amount. The credit amount must not exceed $250,000.00 per tax year per employer.
• Additional credit: Business may claim an additional credit equal to 5% of the QREs that were incurred in collaboration with a research university in this state pursuant to a written agreement between the employer and the research university. The additional credit allowed must not exceed $200,000.00 per tax year.

The base amount follows the federal definitions, which is the average annual amount of qualifying research and development expenses incurred during the 3 calendar years immediately preceding the calendar year ending with or within the tax year for which a credit is being claimed under this section.

Special conditions:

• Company with no prior qualifying R&D expenses: Base amount is equal to zero.
• Company with prior qualifying R&D expenses in only 1 or 2 of the immediately 3 calendar years: The average annual amount must be based on the number of calendar years during which qualifying research and development expenses were incurred

Refunds are available if the credit exceeds the taxpayer’s liability for the year, and the total aggregate credit for all state claimants is capped at $100 million annually — $25 million for small businesses and $75 million for large businesses. The credit allowed for each claimant will be prorated if the aggregate amount of all tentative claims submitted for the year exceeds the annual cap.

Michigan previous R&D credit

For each tax year after 2009 and before January 1, 2025, the previous credit equals to 1.9% of Michigan’s QREs and is limited to 65% of a taxpayer’s tax liability.

Is a non-refundable credit aimed at C-Corporations and can be carried forward for up to 10 years or an unlimited carryforward with certificated credit.

Beginning January 1, 2012, only those taxpayers with a certificated credit, which is awarded but not yet fully claimed or utilized, may elect to be MBT taxpayers. If a taxpayer files an MBT return and claims a certificated credit, the taxpayer makes the election to file and pay under the MBT until the certificated credit and any carryforward of that credit are exhausted.

Comparison between R&D credits

Below we present a comparative table between Michigan’s R&D Tax Credits, reinforcing the differences in definitions, rates, concepts and other details involving this topic:

Overview	Michigan new credit	Michigan previous credit
General rule	Authorized business means a taxpayer that has incurred during the calendar year ending with or within the tax year for which a credit is being claimed under this section qualifying research and development expenses in excess of the base amount.	No mention
Eligible Entities	Corporations and flow-through entity	C-Corporations
Credit calculation	≥ 250 employees: Sum of 3% of the QREs up to the base amount + 10% of the QREs in excess of the base amount.   < 250 employees: The sum of 3% of the QREs up to the base amount + 15% of the QREs in excess of the base amount.	1.9% of Michigan QREs
Refundability	Only the portion of the credit that exceeds the tax liability for the taxpayer	Nonrefundable
Specified research or experimental expenditures	No changes compared to previous credit	“Research and development expenses” means qualified research expenses as that term is defined in section 41(b) of the internal revenue code for research conducted in this state
Carryforward	Not mentioned	10 years or unlimited carryforward with certificated credit
Transferability	Nontransferable	Nontransferable
Base amount	Base amount means the average annual amount of qualifying research and development expenses incurred during the 3 calendar years immediately preceding the calendar year ending with or within the tax year for which a credit is being claimed	No base amount
Special rule (base amount)	An authorized business with no prior qualifying research and development expenses has a base amount of zero.   If qualifying research and development expenses were incurred in only 1 or 2 of the immediately preceding 3 calendar years, the average annual amount must be based on the number of calendar years during which qualifying research and development expenses were incurred.	None
Annual cap (per employer)	250 or more employees: $2,000,000 per employer   Less than 250 employees: $250,000 per employer	Limited to 65% of a taxpayer’s tax liability
Annual cap (global)	$100 million annually, for the whole state, if it exceeds the cap, credit claims will be prorated	No
University collaboration	Additional credit equal to 5% of the QRES incurred in collaboration with a research university in this state, up to $200,000 yearly	None

 

Final Considerations

It is essential to note that the new credit in Michigan is effective for tax years beginning on or after January 1, 2025. Consequently, the Department of Treasury is developing forms, instructions, guidance, and procedures to administer this new credit. Therefore, this study is based on information covered through official channels to date, and we emphasize that new publications may be released after this study is completed.

1) Annual Integrated Economic Survey (AIES)

The United States Census Bureau released preliminary estimates from the Annual Integrated Economic Survey (AIES) which provides key measures of economic activity, including the only comprehensive national and subnational data on business revenues, expenses and assets on an annual basis, allowing to track economic trends, assess industry performance, support police development and inform economic planning, resource allocation and market.

The AIES replaces and integrates seven annual business surveys into one survey. The surveys integrated into the AIES are:

• Annual Capital Expenditures Survey (ACES)
• Annual Retail Trade Survey (ARTS)
• Annual Survey of Manufactures (ASM)
• Annual Wholesale Trade Survey (AWTS)
• Manufacturers’ Unfilled Orders Survey (M3UFO)
• Report of Organization (COS)
• Service Annual Survey (SAS)

The survey parameters use as basis in the North American Industry Classification System (NAICS), and some key statistics are tabulated including Capital Expenditures, Employment, Inventories, Payroll, Sales, Receipts or Revenue and Research Expenses.

In the preliminary results available, that based on 2023 data, considering the United States scenario, the highlights are:

a. Annual Payroll:

• 1st place: Health care and social assistance (NAICS 62)
• 2nd place: Professional, scientific, and technical services (NAICS 54)
• 3rd place: Finance and insurance (NAICS 52)

b. Number of Employees:

• 1st place: Health care and social assistance (NAICS 62)
• 2nd place: Retail trade (NAICS 44-45)
• 3rd place: Accommodation and food services (NAICS 72)

c. Revenue:

• 1st place: Wholesale trade (NAICS 42)
• 2nd place: Manufacturing (NAICS 31-33)
• 3rd place: Retail trade (NAICS 44-45)

In addition, there were some regional highlights, such as:

• Retail Trade Sector: Generated $1.4 trillion in revenue in the Midwest and had an annual payroll of $235.8 billion and employed 6.8 million people in the South.
• Information Sector: In the west, there were 1.4 million employees (a coefficient of variation equal 0.7%) and an annual payroll of almost $251.2 million.
• Finance and Insurance Sector: Special highlight in Northeast region, with the sector ranking second in both Revenue (generated $1.8 trillion) and annual payroll ($271.1 billion). Additional information about the survey and results can be found at: Annal Integrated Economic Survey (AIES)

 

2) Business Trend and Outlook Survey (BTOS)

At the same time of the AIES, the Census Bureau released new data of the Business Trend and Outlook Survey (BTOS), a survey that measures business conditions and projections on an ongoing basis. BTOS data are representative of all employer businesses in the U.S. economy (excluding farms) and provides insight into the state of the economy by providing continuous timely data for key economic measures and business expectations about future conditions.

In the most recent results, the overall projections are positive, with prospects for growth in all aspects of business analyzed for the next six months, notably a 3.3% improvement in performance, an increase in employees of more than 0.8%, and a 1.1% increase in demand.

Overall, the Current Performance Index stands out in the Finance and Insurance, Health Care and Social Assistance, and Professional, Scientific and Technical Services sectors.

Finally, one aspect evaluated in the survey that deserves attention is the use of artificial intelligence (including as example: machine learning, natural language processing, virtual agents, voice recognition, etc.) in the business in producing goods or services, and if, in the next six months, there would be a possibility for the company to use AI in its processes. The highlights are:

a. National:

• The company has already used AI in the last two weeks: 9.4% (an increase of 56% compared with the beginning of 2025 year, and 154% compared to the 2023 year).
• The company think will be using AI during the next six months: 13.5% (an increase of 42% compared with the beginning of 2025 year, and 114% compared to the 2023 year).

b. States:

• The company has already used AI in the last two weeks: The state with the highest percentage was CO, with 12.7% and the state with the lowest percentage was WI.
• The company think will be using AI during the next six months: The state with the highest percentage was again CO, with 19.2% and the state with the lowest percentage was NM.

c. Sectors:

• The sector with the highest percentage was Information Sector (NAICS 51) in both scenarios (with 23.8% in the company has already used AI parameter, and 31.8% will be using AI during the next six months).

These results involving artificial intelligenceare good indicators of the development of this technology, as well as companies’ perception of the importance of adapting their processes and products to the new technological revolution. This perspective has been consistently positive throughout the period analyzed, as shown in the global graph of survey data for the United States:

On July 1st, the H.R. 1 – the “One Big Beautiful Bill Act” – was passed by the Senate after an extended and contentious session filled with vigorous debates and discussions among lawmakers. The final vote tally was notably close, with a narrow margin of 51 votes in favor and 50 against. Vice President JD Vance, serving in his capacity as the President of the Senate, played a crucial role by casting the deciding vote that ultimately allowed the bill to advance.

Having passed through the Senate with amends, the bill now returns to the House of Representatives, but in a significantly altered form compared to the version initially approved on May 22. Among the most significant changes are amendments related to research and development (R&D) expenses, which have been revised to introduce new allocations and funding mechanisms aimed at fostering innovation. These adjustments are expected to impact various sectors, including technology, healthcare, and renewable energy, reflecting a broader commitment to enhancing the nation’s competitive edge in global markets:

• Full Expensing of Domestic R&D Expenditures: The Senate version bill would permanently reinstate the deduction for domestic research and experimental expenditures costs incurred after 2024, and taxpayers can elect whether to deduct or amortize the expenditures which are paid or incurred by the taxpayer during the taxable year.

• Election for retroactive application by certain small business: Eligible taxpayers can elect to apply the full expensing rules starting from tax years beginning after December 31, 2021, instead of 2024. This election must be made within 1 year of the bill’s enactment, the taxpayer shall file an amended return for each taxable year affected.

• Deduction of any unamortized section 174 amounts from 2022-2024: For domestic research or experimental expenditures which incurred in taxable years beginning after December 31, 2021, and before January 1, 2025, and which was charged to capital account, a taxpayer may elect to deduct all at once or to deduct such remaining unamortized amount ratably over the 2-taxable year period beginning after December 31, 2024.

Additionally, amendments were made to the initially approved bill regarding American businesses and companies:

• Termination of Section 179D: The amended bill terminates the energy efficiency commercial buildings deduction; a new subsection (i) will be added stating that this section shall not apply to construction that begins after June 30, 2026.

• Bonus Depreciation: The TCJA provided for 100 percent expensing of certain business property through 2022, with a 20 percent stepdown each year before reaching 0 percent in 2027 (currently set at 40% in 2025). The Senate bill would make 100 percent bonus depreciation permanent for property acquired after January 19, 2025.

• Qualified Business Income Deduction: Under the Senate bill, the qualified business income deduction under Code Section 199A would be made permanent. Additional changes are proposed modifying the limitations and qualification for the deduction.

• International Extensions: The Senate bill would make permanent many international and foreign-related provisions under the TCJA, including the:

• Deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI); and

• Base erosion minimum tax amount.

The bill proposes to adjust the Foreign-Derived Intangible Income (FDII) tax rate from 37.5 percent to 33.34 percent and the Global Intangible Low-Taxed Income (GILTI) rate from 50 percent to 40 percent. Additionally, it plans to change the base erosion minimum tax rate from the current 10 percent to 10.5 percent, effective after 2025.

Stay Informed!

Stay ahead of the curve with the latest legislative updates by visiting our website and following us on LinkedIn. Staying informed about these critical changes is essential for positioning your company for success. Don’t let opportunities pass you by: connect with us and empower your business today!

The Research and Development (R&D) Tax Credit offered in Texas, currently defined and governed by Chapter 171 – Subchapter M, is set to undergo significant changes beginning next year. This transformation follows the approval of Bill SB 2206 by the Texas Senate and its subsequent signing by the Governor.

The updates to the R&D Tax Credit will extend its applicability and align it more closely with federal R&D tax credit definitions and methodologies. Notably, the modifications will increase the rate of the tax credit, thereby enhancing the potential credit valuation for qualifying entities.

These changes are scheduled to take effect on January 1, 2026. Importantly, the new legislation will repeal Section 151.3182, which provides a sales and uses tax exemption for the purchase, lease, rental, storage, or use of depreciable tangible personal property directly utilized in qualified research activities. Additionally, Subchapter M of Chapter 171, which currently governs the tax credit for R&D endeavors, will also be repealed.

The significant changes involve updates to the credit rates, qualifying activities, and the termination of previously authorized credits:

Subchapter M (Current) vs. Subchapter T (Updated)

Eligible Entities

• No changes between the current and updated versions.

Credit Rate (General Rule)

• Current (Subchapter M):
• 5% of the taxpayer’s additional Qualified Research Expenses (QREs) over the base amount.
• 2.5% if the taxpayer had no QREs in one or more of the three preceding tax periods.

• Updated (Subchapter T):
• 8.722% of additional QREs over the base amount.
• 4.361% if no QREs in one or more of the three preceding tax periods.

Credit Rate (With University Collaboration)

• Current:
• 6.25% of additional QREs.
• 3.125% if no QREs in one or more of the three preceding tax periods.
• Updated:
• 10.903% of additional QREs.
• 5.451% if no QREs in one or more of the three preceding tax periods.

Research or Experimental Expenditures

• Current: Defined by IRC §41, limited to research conducted in Texas.
• Updated: Based on Line 48 of IRS Form 6765, limited to research conducted in Texas.

Refundability

• Current: Not refundable.
• Updated: Still not refundable, except for entities not required to pay Franchise Tax during the period.

Annual Cap (Per Employer and Global)

• No cap in either version.

Expiration

• Current: Expires December 31, 2026.
• Updated: No expiration date mentioned

However, it’s essential to note that despite these changes, the other aspects, definitions and procedures existing in the current credit will not be altered. Furthermore, these changes won’t affect unused credits that taxable entities were allowed to carry forward under the old rules. This means entities can still apply those existing credits in their reports until the expiration date set by the previous incentives.

Looking ahead, the revised credit system in Texas will take effect on January 1, 2026. To prepare for this major change, the Texas Comptroller’s office is creating the necessary forms, detailed instructions, and administrative procedures to manage the new credit regulations effectively. For this reason, staying up to date on these developments will be crucial for understanding the full impact of these changes.