Employment Costs & Taxes
The right business climate can turn big ideas into big profits. From creative incentives to affordable real estate and trade networks, West Michigan supports every aspect of business. The Right Place works with state and local partners to tailor high-impact incentive packages that include financing, local tax incentives, and workforce development. Here you’ll find:
- A state business tax climate ranked 13th in the U.S.
- Right-to-work legislation passed in 2012
- Corporate Tax Rate ranked as 10th best in the nation
- State Workers' Compensation costs that are among the lowest in the Midwest
- Regional intergovernmental cooperation to reduce operating costs
- Long-standing partnerships among area manufacturers to lower business costs and improve industry performance.
To learn more about all of our incentive and financing programs or to develop an incentive package tailored to your needs, contact us.
In 2012, Governor Rick Snyder signed legislation enacting new "freedom-to-work" laws in Michigan. The legislation gives Michigan workers expanded options when deciding whether or not to join a union.
To protect workers who lose their jobs through no fault of their own, Michigan businesses pay unemployment insurance on the first $9,000 of wages paid to each worker in a calendar year. Established employers may pay as little as 0.06%.
The unemployment insurance rate is based on the experience rating of the business, which varies depending on how many employees draw unemployment insurance benefits. The new employer rate is 2.7%. Once a business is established in Michigan, businesses' experience ratings vary between 0.06% and 10.3%.
Workers’ Compensation Insurance
Michigan has a competitive workers' compensation (WC) insurance system. Michigan's "open competition" system allows market forces to set the WC insurance rates, thus enabling companies to shop among nearly 250 insurance carriers for the best, lowest-cost options.
Self-insurance, group self-insurance, deductible plans, and other options are available as well. With such a wide-range of cost-savings opportunities, Michigan businesses can play a significant role in containing or reducing their WC costs.
Corporate Income Tax - 6.00%
Michigan levies a Single Business Tax (SBT), which is a modified value-added tax (VAT). The rate is 6.00% and there is an additional modified gross receipts tax at a rate of .8%. For 2015, The Tax Foundation ranked Michigan's corporate tax as 10th best in the nation, up from 49th in 2012.
Personal Income Tax - 4.25%
Michigan's personal income tax rate is one of the lowest in the nation - a flat 4.25% tax rate that is scheduled to decline in the next few years.
Michigan Property Taxes - 65% / 23%
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 2012 average non-homestead property tax rate was 49.54 mills, or $49.54 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.
Michigan’s Sales Tax - 6%
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
Inventory Tax - 0%
Michigan has no inventory tax.
Additional property tax abatements available to Michigan businesses include:
- Locally-negotiated abatements, including 100% new real property exemptions available in specified communities
- 50% abatements for up to 12 years on real property for industrial processors and high-tech companies
In 2014 Michigan reformed its personal property taxation:
- Small taxpayer exemption - all industrial and commercial personal property owned by a business is exempt if the combined true cash value is less than $80,000
- Eligible for exemption - Eligible Manufacturing Personal Property (EMPP) used at least 50% of the time in industrial processing or direct integrated support of industrial processing