  
Michigan's key state taxes are the Michigan Business Tax, Property Tax and Sales & Use Tax. Additional information on Michigan's tax structure is available by clicking here.
Michigan Business Tax (MBT)
The Michigan Business Tax went into effect in 2008, replacing the Single Business Tax.
The Tax
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Business income taxed at a rate of 4.95%
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Margins tax on sales minus purchases of tangible property at a rate of 0.8%
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Banks pay alternate tax capital stock (net worth at a rate of 0.235%).
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Insurance tax rate increased from 1.07% to 1.25% with current credits retained.
For complete MBT details, click here.
Credits for Investing in Michigan
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Investment tax credit for purchase of capital.
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Compensation credit for jobs created or retained.
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Research and development 1.9% credit with no base.
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Investment tax and compensation credit limited to 65% of liability; R and D credit can increase reduction to 75%.
Personal Property Tax Reductions
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65% on average for manufacturing ( 24 mill school tax exemption plus 35% credit on remainder.
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23% on average for commercial property ( 12 mill school tax exemption).
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23% for telephone property.
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10% for natural gas pipelines.
Small Business Features
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$350,000 filing threshold maintained.
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Phase in of liability eliminates "cliff" affect that imposes full liability at $1 over threshold.
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Alternate profits tax maintained but rate lowered from 2.0% to 1.8%.
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Eligibility for small business treatment expanded from $10-million of gross receipts to $20-million of gross receipts.
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Compensation caps (including benefits) increased from $115,000 to $180,000.
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Start up business exemption maintained.
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New exemption for business activity adding 20 jobs and making $1.2-million in new investment.
Other Features
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Partnerships, LLC and sole proprietorships receive deduction for net earnings from self employment to avoid discrimination based on type of organization.
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Construction contractors receive deduction for payments to subcontractors.
Real and Personal Property Taxes
Michigan businesses pay taxes on real and personal property based on state and local millage rates per $1,000 of assessed value. The State has regulated school millage rates at 24 mills. The school tax includes 18 mills for local schools and 6 mills for the State Education Tax. In addition, local millage rates established by counties, municipalities, community colleges, and transportation authorities when approved at the local level.
Taxable value of property is 50% of its current market value, including real and personal property. In addition, personal property is depreciated according to a schedule established by the Department of Treasury. In addition, annual property assessment increases are limited by the State Constitution to the lesser of 5% or the rate of inflation.
Real and personal property taxes can be abated at 50% of the millage rate for eligible businesses at the local and state levels. Contact the Planning and Development Department for information on Property Tax abatements, at (248) 656-4660.
Sales Tax
Michigan has a 6% state sales tax and allows no local sales tax. Many industrial and consumer goods and transactions are exempt from Michigan sales taxes.
Personal Income Tax
The personal income tax is a floating rate currently set at 3.9%.
Local Millage Rates
Rochester Hills has the third lowest millage rate among cities in Oakland County. In addition to operating mills, communities or authorities can assess special assessments or debt mills to fund local infrastructure. Also, local mills may be assessed for public libraries, streets, water and sewer, police and fire service, or parks and recreation.
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