Michigan Corporate Income Tax: The 6% CIT, Who Pays It and Who Is Exempt
Michigan Corporate Income Tax: The 6% CIT, Who Pays It and Who Is Exempt
If you searched for the Michigan corporate tax rate, the answer is 6%. The Michigan corporate income tax, usually called the CIT, is a flat 6% tax on the income of C corporations and of other entities taxed as corporations for federal income tax purposes. Most new owners are not in that group. A standard LLC, S corporation, partnership or sole proprietorship generally does not pay the CIT, so the first question is not what the rate is but how your business is classified for federal tax.
This guide covers who pays the 6% CIT, who falls outside it, the $350,000 and $100 thresholds, the one credit to know about, the filing schedule, and the research and development credit for tax years beginning in 2025.
One piece of history matters if you are reading older material. The CIT replaced the Michigan Business Tax for most taxpayers effective January 1, 2012. Articles that describe the Michigan Business Tax as current are out of date.
The Michigan corporate tax rate at a glance
| Item | Michigan rule |
|---|---|
| Rate | 6% Corporate Income Tax (CIT) |
| Who pays | C corporations and entities taxed as corporations for federal purposes |
| Who generally does not pay | LLCs, S corporations, partnerships and sole proprietorships, unless they elect or are taxed as a C corporation |
| Filing and payment threshold | Allocated or apportioned gross receipts under $350,000 and/or annual liability of $100 or less (confirm the exact test with Treasury) |
| Credit | Small business alternative credit, an alternate rate of 1.8% of adjusted business income (confirm eligibility with Treasury) |
| Calendar-year due dates | Quarterly on April 15, July 15, October 15 and January 15; annual return due April 30 |
| Replaced | Michigan Business Tax, for most taxpayers, effective January 1, 2012 |
Who pays the 6% CIT
The CIT applies to two groups. The first is a C corporation. A C corporation doing business in Michigan owes the CIT on its Michigan share of income, measured through the apportionment rules that Treasury administers.
The second group is any entity taxed as a corporation for federal income tax purposes. The most common example is an LLC that elects federal C corporation treatment. That LLC is subject to the 6% CIT, not the individual income tax that applies to other LLCs.
Before you assume you are in this group, confirm your federal tax classification with a CPA. Your filing with LARA does not decide the question. The federal classification does, and it determines which Michigan tax applies.
Who is not subject to the CIT
Most small businesses are pass-through entities. A standard LLC, an S corporation, a partnership and a sole proprietorship do not pay the CIT at the entity level. Their income passes through to the owners, who report it on their Michigan individual income tax return at the flat 4.25% rate for the 2026 tax year.
A pass-through does not become a corporate taxpayer because it is profitable. The status changes only when the entity elects, or is taxed as, a C corporation. Consider a two-owner LLC that stays a pass-through. Its profit is divided by ownership percentage, and each owner adds their share to their own Michigan return. The LLC itself does not owe the 6% CIT on that income.
The $350,000 and $100 thresholds
A C corporation is not required to file or pay the CIT if its allocated or apportioned gross receipts are under $350,000 and/or its annual liability is $100 or less. Two points matter here.
- Allocated or apportioned means Michigan's share. The receipts test uses the part of your gross receipts attributed to Michigan, not your total revenue from every state and country. A company with $1 million in total sales can still pass the receipts test if its Michigan share is under $350,000.
- The wording is "and/or." The rule does not say whether a corporation must satisfy one test or both to be excused. Do not treat the threshold as settled until Treasury confirms how it applies to your numbers.
The gross receipts test does not apply to financial institutions or insurance companies. Those businesses pay alternative taxes instead, so if you are in either industry, confirm with Treasury which tax applies to you.
Being excused from the CIT does not excuse you from LARA's annual filing. An LLC files an annual statement ($25, due February 15), and a corporation files an annual report ($25, due May 15). These are separate obligations with a separate agency.
The small business alternative credit
The small business alternative credit is the one CIT credit this guide covers. It provides an alternate rate of 1.8% of adjusted business income, well below the standard 6% rate. Because it changes the amount owed rather than trimming a small line item, ask about it before you file.
The credit is not automatic. Treasury sets the eligibility limits, and this guide does not state them. Confirm with Treasury whether your business qualifies, how adjusted business income is calculated for this purpose, and how the credit is claimed on the return.
Research and development credit
A new research and development tax credit applies for tax years beginning in 2025. This guide does not state its rate, limits or qualifying expenses. Confirm those rules with Treasury, and ask a CPA whether your research spending qualifies before you count on the credit.
Filing and payment schedule
CIT returns and payments are due quarterly, with an annual return. For a calendar-year taxpayer, the dates are:
| Filing | Due date (calendar year) |
|---|---|
| Quarterly returns and payments | April 15, July 15, October 15 and January 15 |
| Annual return | April 30 |
If your business uses a fiscal year, the dates shift. Confirm your schedule with Treasury before the first due date. A missed quarter is easy to overlook when the entity has little or no liability in a given period.
Michigan taxes and fees that get confused with the CIT
- No franchise tax. Michigan imposes no franchise tax. The CIT is the entity-level income tax. The only recurring LARA charge is the $25 annual filing described above.
- Personal income tax. Pass-through owners pay the flat 4.25% individual income tax for the 2026 tax year on their share of business income.
- Flow-Through Entity Tax. Michigan offers an elective Flow-Through Entity Tax. It is optional and works differently from the CIT. Confirm with Treasury how it operates, who qualifies, and whether it fits your owners.
- City income tax. Only 24 Michigan cities levy a city income tax, and it is separate from the state CIT. Check with the city directly whether it applies to your business.
- Sales tax. The state sales tax rate is also 6%, but it is a different tax with a different registration. Retailers register with Treasury for a sales tax license, which is free and can arrive in as little as 7 business days. Register at the Treasury online business registration page.
- Licenses are separate. Michigan has no general statewide business license. A LARA filing forms or maintains your entity, and registering through the MiBusiness Registry is a filing, not a license. Licensing is by trade or activity, and local zoning and approvals apply on their own track.
How to confirm where your business stands
- Confirm your federal tax classification with a CPA. This decides whether the 6% CIT applies at all.
- If you are a C corporation or taxed as one, estimate your allocated or apportioned gross receipts and annual liability, then ask Treasury how the $350,000 and $100 tests apply to your figures.
- Ask Treasury about the small business alternative credit and the research and development credit before you file.
- Calendar the quarterly and annual CIT due dates, and calendar your LARA annual filing separately.
Official resources
- Michigan Department of Treasury, taxes: michigan.gov/taxes
- LARA Corporations Division: michigan.gov/lara/bureau-list/cscl/corps
- MiBusiness Registry business search: mibusinessregistry.lara.state.mi.us
- Michigan Small Business Development Center, for planning questions: michigansbdc.org
This guide is informational content, not legal or tax advice. Corporate tax treatment depends on your entity's federal classification, your receipts, your owners and any elections you make. Consult a qualified CPA or attorney before filing, making an election or relying on a credit, especially if you have multiple owners, activity outside Michigan, or a fiscal-year schedule.