At a glance
- Corporate tax
- 6% (over $350,000 receipts)
- Tax on wages
- 4.25% flat
- Sales tax
- 6%, no local
- Economic nexus
- $100,000 or 200 transactions
- Minimum wage
- $13.73/hr
- UI wage base
- $9,000
- New-employer UI rate
- 2.7%
- Paid leave program
- None
- Annual report
- May 15; $25
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Qualify the corporation
Before hiring or opening an office in MichiganApply to LARA’s Corporations Division for a certificate of authority ($60 for a foreign profit corporation).
Register with Treasury
Before the first Michigan payrollRegister with the Michigan Department of Treasury for withholding (and sales and use tax if you have nexus). Detroit withholding needs no separate registration.
Open a UIA account
When you first pay Michigan wagesRegister with the Unemployment Insurance Agency; new employers pay 2.7% on the first $9,000 of wages.
Report new hires
Within 20 days of hireReport each new hire to the Michigan New Hires Operation Center.
Write a paid sick time policy
From the first Michigan employeeAdopt an Earned Sick Time Act policy: 40 hours a year for ten or fewer employees, 72 hours above that.
Register with the city
Before the first payroll for that employeeIf an employee lives or works in one of the 23 cities that run their own income tax, register with that city for withholding.
Get workers’ compensation
Before the first employee startsBuy workers’ compensation coverage under Michigan’s Workers’ Disability Compensation Act.
The six areas
- AccountingAccounting and state tax in MichiganMichigan taxes C-corps at 6% on a single sales factor once Michigan receipts reach $350,000, and decoupled from the federal R&D expensing change, so research costs are still amortized over five years for Michigan.Corporate income tax6%
- ReceivablesReceivables and sales tax in MichiganMichigan charges a flat 6% with no local rates, counts 200 transactions toward nexus, and generally doesn’t tax remotely accessed SaaS.Sales tax rate6%
- PayablesPayables and contractors in MichiganMichigan wants a copy of every 1099 issued to a Michigan resident, filed directly for the 1099-NEC, and charges 6% use tax on untaxed goods and delivered software.State 1099 filingYes
- PayrollPayroll taxes and employer rules in MichiganMichigan withholds a flat 4.25%, charges new employers 2.7% UI on the first $9,000, pays $13.73 an hour in 2026, requires paid sick time from every employer and has 24 city income taxes.Withholding rate (2026)4.25%
- ComplianceCompliance and filings in MichiganMichigan needs a $60 certificate of authority, a $25 annual report each May 15, a CIT return due April 30 and an unclaimed property report each July 1.Certificate of authority$60
- AdvisoryAdvisory: credits and decisions in MichiganMichigan’s refundable R&D credit, new for 2025, pays even pre-revenue companies; the rest of the advisory work is the Section 174 decoupling and 24 city income taxes.R&D creditRefundable
Who you register with
- Michigan Department of TreasuryCorporate income tax, withholding, sales and use tax, Detroit city taxes and the R&D credit, via Michigan Treasury Online
- Unemployment Insurance Agency (UIA)Unemployment insurance registration and quarterly reports
- Department of Licensing and Regulatory Affairs (LARA) — Corporations DivisionCertificate of authority and the annual report
- Department of Labor and Economic Opportunity (LEO) — Wage and HourMinimum wage and the Earned Sick Time Act
- Michigan New Hires Operation CenterNew-hire reporting
- Michigan Treasury — Unclaimed PropertyAnnual holder report
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Michigan’s neighbors.
Common questions
Do we file a Michigan CIT return at all?
Only once its apportioned or allocated gross receipts reach $350,000 and its liability is over $100. Below that line a company with Michigan nexus has no filing requirement, though it can file to claim a refund of estimates or to create and carry forward a business loss — which is worth doing in a loss year.
Is our SaaS taxable in Michigan?
Pure SaaS, accessed remotely with nothing delivered, generally isn’t. Michigan taxes prewritten software that is delivered to the customer, so a product with a downloadable desktop client, or a license to install code, can be taxable. Where both are bundled, Michigan looks at whether the download is incidental to the service.
Do we file our 1099-NECs with Michigan?
Yes, for any 1099 issued to a Michigan resident — wherever your company is, wherever the work was done and whether or not you withheld. Michigan is in the Combined Federal/State Filing program, but state copies of the 1099-NEC with a Michigan impact must be filed directly with Treasury, by January 31.
Does Michigan’s sick leave law apply to a three-person startup?
Yes. Since February 21, 2025 the Earned Sick Time Act covers every Michigan employer. Employers with more than ten employees must allow up to 72 hours of paid sick time a year; small employers (ten or fewer) must allow 40 hours paid. Employees accrue time as they work, or the employer can frontload it.
When is the Michigan annual report due and what does it cost?
May 15 every year for profit corporations, including foreign corporations with a certificate of authority. It costs $25 on time; filed from May 16 the fee steps up month by month to a $75 maximum from September 1.
Can a pre-revenue startup get cash from Michigan’s R&D credit?
Yes, which is unusual. Michigan’s R&D credit, available for tax years beginning on or after January 1, 2025, is refundable, and it can be claimed by CIT filers and by flow-through businesses against withholding tax. The credit is computed on Michigan qualified research expenses above a base amount; Treasury’s Revenue Administrative Bulletin 2026-4 explains the calculation, and the claim is filed through Michigan Treasury Online.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Michigan Treasury — Form 4890, 2025 CIT General Information for Standard Taxpayers
- Michigan Treasury — CIT Due Dates for Tax Year 2025
- Michigan Treasury — Decoupling Michigan Income Taxes from Certain IRC Provisions (Feb 25, 2026)
- Michigan Treasury — Research and Development (R&D) Tax Credit
- Michigan Treasury — Form 446, 2026 Michigan Income Tax Withholding Guide
- Michigan Treasury — W-2 and 1099 Filing Requirements
- Michigan Treasury — Remote Seller FAQ
- Michigan Treasury — Sales and Use Taxes
- Michigan Treasury — Which cities impose an income tax?
- Michigan Treasury — City of Detroit Employer Withholding Tax
- Michigan Treasury — City of Detroit Individual Income Tax
- Michigan UIA — Unemployment Insurance Taxes (Tax Rate Summary for 2026)
- Michigan UIA — Taxable Wage Base FAQ
- Michigan LEO — Minimum Wage
- Michigan LEO — Earned Sick Time Act
- Michigan LARA — Corporations Division Filing Fees
- Michigan LARA — Corporations Division
- Michigan Treasury — Unclaimed property, holder reporting (Numbered Letter 2009-01, revised)
- Michigan New Hires Operation Center
- Michigan LEO — Workers’ Disability Compensation Agency
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.