Michigan
Taxes and business formation • USA 2025–2026
TL;DR
Michigan at a glance — 2026 figures
State filing fees and tax position for individuals and companies registered in Michigan.
| Parameter | Value |
|---|---|
| Personal income tax | See the income tax section below |
| LLC formation fee | $50.00 |
| LLC annual report fee | $25.00 |
| LLC annual report deadline | February 15 |
| LLC dissolution fee | $10.00 |
| Corporation formation fee | $60.00 (minimum) |
| Corporation annual report fee | $25.00 |
State filing fees are set by the Secretary of State and change without notice — the official source is linked in each section below. Federal figures for tax year 2026 are on the 2026 tax cheat sheet.
Updated: August 2026
Corporation in Michigan
Tax system of Michigan
Income Tax
Michigan has a single flat personal income tax rate — in 2024 it is 4.25%. This tax applies to most types of income — wages, business income, rental income, capital gains, and dividends. In addition, most counties and cities, including Detroit, also levy a local income tax: from 1% to 2.4% for residents and slightly lower for non-residents working in those jurisdictions.
Sales Tax
Michigan's base sales tax rate is 6%, and local jurisdictions are not authorized to add additional taxes. Sales tax is charged on most goods and certain services, including rentals, telecommunications, and digital content. The tax does not apply to groceries, prescription drugs, and certain medical items. Determining the taxable base and the correct sales tax rate can be quite complex and requires a professional approach and knowledge of state law. Our firm provides services for obtaining a Sales Tax Certificate and for preparing and filing the Sales and Use Tax Return. We advise business owners on all matters related to this tax, including registration, calculation, and reporting.
Property Tax
Property tax in Michigan is administered at the local level (city, county, school district). The average effective rate is about 1.32% of assessed value, which is above the national average. Commercial and investment real estate is taxed in full, while owners of a primary residence can access the Principal Residence Exemption program, which lowers the tax base. Properties are reassessed upon sale or renovation, and the tax can rise significantly after a change in ownership.
Business Taxes
Michigan uses a unique approach to corporate taxation through the Corporate Income Tax (CIT), which is 6% of taxable income for C-corporations. S-corporations, LLCs, and partnerships are not subject to the corporate tax. All businesses operating in the state must file an Annual Report by February 15 each year for LLCs and May 15 for corporations. Our firm provides services for LLC and corporation registration, Annual Report preparation, and consulting on tax optimization and the choice of tax structure.
Tangible Personal Property Tax
Businesses owning tangible personal property (equipment, furniture, etc.) file a Property Statement by February 20 each year.
Excise Taxes
Michigan levies excise taxes on gasoline, alcohol, tobacco products, electronic cigarettes, and marijuana (as part of legal retail sales). There is also a tax on car rentals, short-term accommodations, and ferry transportation. Activities involving regulated goods require special licenses and monthly reporting.
Favorable Tax Conditions
Michigan offers a stable and predictable tax system with a flat personal income tax, no local surcharges on sales tax, and a relatively low corporate tax rate. The state actively supports industrial, technology, and research businesses through tax credit programs, grants, property tax exemptions, and workforce initiatives.
Compared to Other States
Compared with other industrially developed states (for example, Illinois or Pennsylvania), Michigan offers a transparent and stable tax environment. There are no progressive personal income tax brackets, which is favorable for business owners and investors. Also, unlike New York or California, Michigan has no franchise tax or minimum tax on capital. However, it should be noted that property tax and business tangible personal property obligations here are higher than in most Southern states. In addition, local income taxes in cities such as Detroit or Flint can significantly increase the tax burden on individuals.
Frequently asked questions
Does Michigan have a personal income tax?+
Yes. Michigan levies a personal income tax on residents. The current rates and brackets are set out in the income tax section on this page, with a link to the state tax authority — rates are revised by the legislature, so always check the official source before filing.
How much does it cost to register an LLC in Michigan?+
The state filing fee in Michigan is $50.00. On top of that you need a registered agent with a physical address in the state, and FinTaxes charges from $299 for the formation service itself.
When is the annual report due for a Michigan LLC?+
The Michigan annual report fee is $25.00, due February 15. Missing it typically triggers a late penalty and, if left unresolved, administrative dissolution of the company.
Do I need to live in Michigan to open an LLC there?+
No. You do not need to live in Michigan — or in the United States at all — to own an LLC registered there. Non-residents can form and own a US LLC; what the state requires is a registered agent with a physical in-state address. Your own tax residency is a separate question and decides which returns you file.
Can FinTaxes file my Michigan state return remotely?+
Yes. FinTaxes prepares and e-files federal and Michigan state returns entirely remotely, for clients anywhere in the US or abroad, as an Authorized IRS e-file Provider.
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