As Michigan prepares for the 2025–26 legislative session, businesses in Ann Arbor and across Washtenaw County face a complex policy environment that could shape the way they hire, operate, and grow over the next two years. Lawmakers in Lansing will grapple with questions of taxation, workforce development, environmental standards, technology regulation, and local governance. For Ann Arbor businesses, the coming session is not just a matter of abstract political debate, it is a period when decisions made in the state capitol will ripple into everyday business practices.
This article explores several key areas that local business leaders should watch closely. Each theme highlights the intersection of state policy with the economic, cultural, and entrepreneurial fabric of Ann Arbor. By considering these developments now, companies can anticipate challenges, seize new opportunities, and strengthen their role as stakeholders in shaping Michigan’s future.
One of the perennial issues facing Michigan legislators is the structure and fairness of the state’s tax system. Over the past decade, Michigan has alternated between efforts to cut corporate taxes to attract investment and proposals to expand the tax base to stabilize state revenues. As the 2025–26 session opens, there is renewed discussion of adjusting business taxes in light of inflationary pressures, ongoing budget commitments, and the need to fund major infrastructure upgrades.
Ann Arbor businesses should be alert to possible changes in both the Corporate Income Tax and the Personal Property Tax, which disproportionately affects small and medium-sized enterprises. Tech startups, manufacturers, and service providers alike are particularly concerned about whether new legislation will simplify compliance or add layers of complexity. The city’s entrepreneurial community anchored by the University of Michigan’s innovation ecosystem relies on predictable tax policy to attract venture capital and talent. Even subtle shifts could influence how investors evaluate Michigan as a hub for growth.
Moreover, businesses should not overlook the possibility of targeted tax incentives, especially in sectors tied to clean energy, mobility innovation, and advanced manufacturing. If lawmakers create new credits or deductions for sustainability initiatives, Ann Arbor companies may find themselves well positioned to benefit. However, incentives often come with reporting requirements and oversight provisions, meaning firms will need to weigh the administrative costs against potential savings.
Ann Arbor’s businesses, from high-tech firms to local restaurants, share a common challenge: finding and retaining talent. Labor market policy is therefore another area of keen interest in the upcoming legislative session. The state continues to wrestle with how to balance workforce development with protections for workers, particularly in a post-pandemic environment where remote work and flexible arrangements have changed expectations.
Minimum wage increases and potential revisions to overtime thresholds are likely to resurface in committee hearings. For businesses in hospitality, retail, and food service industries that are significant employers in Ann Arbor such measures could reshape cost structures. On the other hand, raising wages could also stimulate local consumer spending, creating a more dynamic marketplace. The debate over non-compete agreements, which affect tech firms and professional services, is another area where legislation may emerge. Restrictions or outright bans on such agreements could make it easier for talent to move between companies, accelerating innovation but also intensifying competition.
Additionally, the legislature may expand funding for workforce training programs, particularly those aligned with Michigan’s clean energy and automotive transformation. Ann Arbor businesses tied to electric vehicles, software, and sustainable technology stand to benefit from a workforce better prepared for the demands of a rapidly changing economy. Employers should track whether new legislation creates grants, partnerships with universities, or apprenticeship opportunities that align with their hiring needs.
Economic growth depends on reliable infrastructure, and Michigan’s lawmakers are expected to revisit issues of transportation, broadband access, and affordable housing in the 2025–26 session. For Ann Arbor businesses, these debates hit close to home. The city’s growing population, fueled by university activity and tech-sector expansion, has placed pressure on both roads and housing stock.
The legislature may pursue long-term funding solutions for road maintenance and public transit, both of which directly affect Ann Arbor’s commuter-heavy workforce. Expanded state support for regional transit could ease congestion and improve access to talent from surrounding communities. Similarly, broadband expansion remains a statewide priority, and new funding streams could bring faster internet service to underserved parts of Washtenaw County. For businesses that rely on digital commerce and remote collaboration, stronger broadband infrastructure is not a luxury but a necessity.
Housing policy is also expected to gain attention. Rising costs in Ann Arbor have made it difficult for many workers to live close to their jobs, creating strains on local businesses that depend on service workers. If the state adopts measures that incentivize affordable housing development, employers may see improvements in recruitment and employee retention. On the other hand, new zoning and development rules could spark tensions between growth advocates and residents concerned about preserving Ann Arbor’s character. Businesses will need to follow these debates carefully, as housing affordability is intertwined with workforce stability.
Michigan has long positioned itself as a leader in the clean energy transition, and the 2025–26 session is expected to continue this trajectory. Recent commitments to renewable energy standards and carbon reduction goals mean that legislators will likely fine-tune policies governing utilities, emissions, and corporate sustainability. For Ann Arbor businesses, these developments present both regulatory obligations and strategic opportunities.
Companies with significant energy usage, such as manufacturers or research labs, must anticipate possible changes in utility rates or emissions reporting requirements. At the same time, state-level incentives for solar power, electric vehicle infrastructure, or green building practices could reduce long-term operating costs for those who invest early. Ann Arbor’s sustainability-minded community provides fertile ground for businesses that can align their operations with environmental goals, both as a branding advantage and as a compliance strategy.
Environmental regulation will not be confined to energy policy alone. Legislators may revisit water quality protections, waste management standards, and climate adaptation measures. Businesses in sectors such as construction, food service, and health care should be alert to how new rules could affect costs and operational practices. The key for Ann Arbor businesses will be to approach environmental policy not solely as a regulatory burden, but as an arena where innovation and reputation can translate into competitive advantage.
Ann Arbor’s reputation as a hub of innovation means that technology regulation is not a distant concern but a direct factor in business operations. The 2025–26 legislative session is expected to see heightened debate around data privacy, cybersecurity, and artificial intelligence. Michigan lawmakers are considering proposals that would establish clearer standards for how businesses collect, store, and use consumer data. For companies that rely on customer information whether in retail, health care, or software development such laws could require new compliance infrastructure.
Artificial intelligence regulation is also moving from the federal to the state level, with policymakers exploring guardrails for the ethical use of algorithms in hiring, lending, and public services. Businesses that use AI-powered tools in recruitment, marketing, or analytics should monitor whether state legislation introduces disclosure or auditing requirements. Ann Arbor’s startup ecosystem, often at the forefront of AI research, could be affected both by restrictions and by new opportunities to commercialize ethical, transparent technology solutions.
Cybersecurity standards are another likely area of focus, particularly given the increasing frequency of ransomware attacks and data breaches nationwide. Companies will need to assess whether state legislation imposes new reporting obligations or liability frameworks. While compliance may add costs, stronger standards could also reduce risks and build consumer trust in a competitive digital marketplace.
Finally, Ann Arbor businesses must watch how the state legislature navigates the balance between local control and state preemption. Over the past several years, Michigan has seen recurring conflicts between municipalities and the state over issues ranging from minimum wage ordinances to environmental standards. The 2025–26 session is likely to revive debates about the extent to which local governments can set their own rules for zoning, labor, and environmental protection.
For businesses, the stakes are high. Greater local control could allow Ann Arbor to tailor policies that reflect its progressive values and economic profile, potentially creating unique opportunities in sustainability or housing development. However, a patchwork of local rules across Michigan could complicate compliance for businesses that operate in multiple jurisdictions. Conversely, stronger state preemption could create uniformity but might limit Ann Arbor’s ability to pursue innovative policies that align with its community values.
The key for local businesses will be to engage in these discussions and advocate for policies that strike the right balance between statewide consistency and local flexibility. By participating in chambers of commerce, trade associations, and city-led initiatives, Ann Arbor’s business community can help shape the outcome of these critical governance debates.
The 2025–26 legislative session in Michigan will be more than a routine cycle of policy debate it will be a period of decisions that directly influence the trajectory of Ann Arbor’s business community. From taxation and labor policy to infrastructure, environment, technology, and governance, the issues on the table touch every sector of the local economy. Businesses that monitor these developments, adapt proactively, and engage with policymakers will not only mitigate risks but also position themselves for growth in a changing landscape.
Ann Arbor’s unique combination of university-driven research, entrepreneurial energy, and community engagement makes it a focal point for how state policy interacts with local economies. By anticipating change and contributing to the conversation, Ann Arbor businesses can play a leading role in shaping Michigan’s economic future during the 2025–26 legislative session and beyond.
Contact Tishkoff
Tishkoff PLC specializes in business law and litigation. For inquiries, contact us at www.tish.law/contact/. & check out Tishkoff PLC’s Website (www.tish.law/), eBooks (www.tish.law/e-books), Blogs (www.tish.law/blog) and References (www.tish.law/resources).
Sources
- Citizens Research Council of Michigan, “Michigan’s Fiscal Future: Revenue Trends and Policy Choices.” https://crcmich.org/michigans-fiscal-future
- Michigan Chamber of Commerce, “2025 Legislative Priorities for Business.” https://www.michamber.com/
- University of Michigan Center for Local, State, and Urban Policy, “Policy Perspectives on Workforce and Economic Development.” https://closup.umich.edu/
- Michigan Department of Environment, Great Lakes, and Energy, “Clean Energy and Climate Policy Initiatives.” https://www.michigan.gov/egle
- Brookings Institution, “State-Level Regulation of Technology and Data Privacy.” https://www.brookings.edu/articles/how-different-states-are-approaching-ai/