Amid the chaos of the federal government’s budget-induced shutdown, the Michigan state government has signed into law its budget for fiscal year 2026. Narrowly avoiding a shutdown of their own, Governor Gretchen Whitmer signed the budget into law on Oct. 7, effective immediately.
Bipartisan collaboration on the budget allowed for both sides of the aisle to put many of their party’s big-ticket items on the final bill. Under largely Republican backing, a policy eliminating taxes on tips, overtime, and social security made it into the budget. Democratic Gov. Whitmer personally championed “$2 billion in ongoing resources for improving state and local roads when fully implemented over the next four years.” The budget also includes a massive $21.3 billion allotment for public education, increasing the average spending per pupil to $10,050 (up from $9,608) and promising to continue funding the free student meal program statewide.
A key aspect of the 2026 budget lies in its changes to Michigan’s tax policy. In a first-in-the-nation move, the bill “decouples” Michigan from many components of the federal Internal Revenue Code (IRC). By nullifying select federal deductions and credits, Michigan expects an extra $677 million in tax revenue. Additionally, the state legislature, with a slim 19-17 margin in the Senate, passed a 24 percent tax on wholesale cannabis products sold in the state. Based on historical data, lawmakers expect $420 million in additional tax revenue from the measure, a majority of which will be directed into road reconstruction efforts.
Copperwood Mine, a proposed metallic sulfide mine positioned next door to the Porcupine Mountains, has not been allotted any funding in the 2026 budget. Originally seeking $50 million for infrastructure development around Wakefield, Highland Copper Company was disappointed to see that the proposition did not pass. Despite missing out on state funding, Highland intends to proceed with development. “While we are disappointed that funding wasn’t included in this year’s budget, our confidence is unwavering,” says CEO Barry O’Shea.
Michigan law requires lawmakers to construct a finalized budget by Jul. 1 for the fiscal year that begins on Oct. 1. While the state Senate met this deadline, negotiations within the House of Representatives ground to a halt during the summer. In order to avoid a state government shutdown, the state passed a temporary continuation budget on Oct. 1 that bought sufficient time to pass the final bill.
Gov. Whitmer issued the following statement after the bill’s passage: “Today’s balanced, bipartisan budget is a big win for Michiganders. We brought members on both sides of the aisle together to provide tax breaks to seniors and working families, protect access to affordable health care, feed every child free meals at school, help our students succeed academically, and ensure Michiganders are safe in their communities.” Effective immediately, the budget will fund its programs through Sep. 30, 2026.
