franchise tax

A franchise tax is a state tax on businesses and other entities (corporations, limited liability companies, trusts, etc.) that are formed in or doing business in a state.

A franchise tax is said to be a tax on the privilege of doing business in a state and is sometimes referred to as a privilege tax. The amount of tax due is often calculated as a percentage of a business’s income, for example.

Michigan does not impose a traditional franchise tax on businesses. Instead, Michigan levies a Corporate Income Tax (CIT) on C corporations and entities taxed as corporations federally. As of the current regulations, the CIT is a flat rate tax on the federal taxable income of a corporation, with adjustments specific to Michigan tax law. The rate has been set at 6% of the corporation's tax base, which is generally the corporation's federal taxable income, with certain adjustments. Other business entities, such as S corporations, partnerships, and sole proprietorships, are not subject to the CIT. Instead, income from these entities is passed through to the owners and taxed at the individual income tax rate. It's important for businesses operating in Michigan to consult with an attorney or a tax professional to understand their specific tax obligations and ensure compliance with state tax laws.

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Taxes

franchise tax

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Michigan State Code

Michigan State Code

Taxes

franchise tax

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