Taxes

Michigan's New Corporate Income Tax

Michigan will replace the Michigan Business Tax (MBT) on January 1, 2012 with a new, simplified corporate income tax. The new structure will tax C-Corporations at 6% on federal taxable income apportioned to Michigan. Other entities – individuals, partnerships, LLCs, etc. – will have income flow to their personal income tax. The personal income tax rate will remain at 4.35%, dropping to 4.25% in 2013.

Michigan’s overall business tax climate ranking is now 13th in the U.S., according to the Tax Foundation. In isolating the corporate tax rankings, the Foundation’s Michigan ranking jumps to 22^nd from the previous level of 48^th.

The new tax system will not impact the alternative business income tax for small businesses, and other economic development tools are still available.

Personal Income Tax

Michigan's personal income tax rate is one of the the lowest in the nation - a flat 4.35% tax rate that is scheduled to decline in the next few years.

Michigan Property Taxes

While tax rates vary by location, Michigan's property tax system provides automatic exemptions that effectively cut personal property taxes by:

• 65% for industrial businesses
• 23% for commercial businesses

Michigan's 2008 average non-homestead property tax rate was 48.39 mills, or $48.39 per $1,000 of assessed property, with real and personal property subject to taxation at 50% of current market value. Industrial personal property is automatically exempt from 24 mills for schools, and commercial personal property is exempt from 12 mills.

Additional property tax abatements available to Michigan businesses include:

• locally-negotiated abatements, including 100% new personal property exemptions available in specified communities
• 50% abatements for up to 12 years on real and personal property for industrial processors and high-tech companies
• abatements up to 100% for rehabilitation projects
• more than 100 sites in virtually tax-free Renaissance Zones™, which effectively eliminate general property taxes
• a 35% MBT credit for taxes paid on industrial personal property

Michigan’s Sales Tax

The state sales tax is 6% on sales of tangible goods. No local sales taxes are allowed.

Tax Exempt Purchases There is no state sales tax charged on:

• manufacturing machinery and equipment
• electricity and natural gas used in production
• pollution control equipment

To learn more about all of our incentive and financing programs or to develop an incentive package tailored to your needs, contact us or a member of The Right Place business development team .