Taxation in Michigan

Updated on Monday 17th September 2018

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Michigan or the Great State Lake has seen a series of improvements in the taxation structure for the last few years, in order to offer a great business environment for all foreigners interested in opening a company in USA. With a flat rate for the income tax, regardless of the profits earned, Michigan is often the choice for entrepreneurs looking to thrive in USA and benefit from a great tax structure. If you are interested in starting a business in USA, including Michigan, we invite you to talk to our specialists in company formation in USA for information and assistance.

What is the income tax rate in Michigan?

All companies in Michigan are subject to a flat income tax rate of 6%, the second lowest in the USA. As for the personal income tax, this is set at a 4.25% rate and it is good to know that several cities in Michigan are entitled to collect their own income taxes, ranging from 1% to 2.4%.

What is the sales tax rate in Michigan?

The standard sales tax in Michigan is set at a 6% rate, with the mention that municipalities of this American state do not impose their own sales tax. The 6% sales tax rate is applicable to most of the goods and services available for sale purposes in this state.

Is there a privilege tax in Michigan?

No, there is no privilege tax, nor a franchise tax applicable for businesses with establishments in Michigan. This is among the reasons why entrepreneurs from abroad should choose Michigan for company formation. In this direction, we invite you to find out information from our general guide to company incorporation in Michigan

Taxation of S Corporations in Michigan

S corporations are seen as pass-through entities, meaning that the profits registered by a member of the corporation will be subject to an income tax of 4.25%. The same thing is available for limited liability companies in Michigan or sole traders in this American state.

Short facts about the taxation in Michigan

Having an idea about how is the business done in an American state, in our case Michigan, will help the entrepreneur decide on the business structure. In the same time, he/she will bear in mind the taxes that need to be paid in compliance with the chosen entity. Here are a few details about the taxes in Michigan:
  • in Michigan, there is no inheritance or an estate tax; 
  • the income tax rate of 4.25% is applicable to capital gains in Michigan;
  • an average rate of 1.78% represents the property tax in Michigan;
  • companies located in other states but with registered incomes in Michigan need to pay the taxes in this state.

For a proper understanding of the taxation system in Michigan, we invite you to contact our company incorporation specialists in USA at any time.