The Michigan Economic Growth Authority or MEGA incentive was established in 1995 as a mechanism for the state to reduce the tax burden for growing companies in select industries. MEGA candidates are typically those companies that wish to locate or expand facilities in Michigan, while simultaneously having the opportunity to locate elsewhere and thus realize a significant cost advantages. Administered by the Michigan Economic Development Corporation, the incentive works by granting single business tax credits to qualifying companies (those engaged in manufacturing, R&D, wholesale trade or office operations) based on the number of new jobs to be created. Michigan-based companies must create and maintain at least 75 jobs, while out-of-state firms are required to create and maintain 150 new jobs in order to receive the SBT credits. The credits are available for a term of up to 20 years.

The program also requires that the community in which the company locates and creates the new jobs must demonstrate “local participation”: This typically takes the form of granting an IFET under PA 198 (of 1974) or, if the MEGA recipient does not qualify for an IFET, providing a service for the company that has a tangible monetary value — such as holding a job fair or waiving development fees.

Among the several variations on the traditional MEGA incentive is the Hi-Tech MEGA. These tax credits are designed to attract new and innovative companies that specialize in cutting-edge technologies. The program was developed by the legislature in response to interstate competition for expansions and relocations of businesses in emerging industries.

Those businesses that qualify for this incentive (among them, advanced vehicle technology, biotechnology, engineering and laboratory testing related to product research and development, and medical device technology) must devote at least 25 percent of their operating expenses to research and development. Each credit may be awarded for up to 20 years and for up to 100 percent of the SBT related to the project.

Other variations on the traditional MEGA have been established for the purposes of business retention and the promotion of agribusiness. While all MEGA incentives are awarded solely at the discretion of the MEGA Board and the Michigan Economic Development Corporation, MCPED can provide you with the free and confidential guidance that you need as you begin the negotiation process with the state.