--- title: "Michigan LLC Taxes: What You'll Actually Owe in 2026 | LLC Attorney" description: "How Michigan LLC taxes work in 2026: the flat 4.25% income tax, no mandatory franchise tax, sales tax rules, the $25 Annual Statement, self-employment tax, and the S-Corp election." canonical: https://llcattorney.com/states/mi/llc-taxes-michigan image: https://llcattorney.com/images/share-cover.png source_path: /states/mi/llc-taxes-michigan --- Key Takeaways - Michigan taxes LLC pass-through income at Flat 4.25% - Flow-Through Entity (FTE) Tax: 4.25% of positive business income if elected; $0 if not elected, due Election due the 15th day of the 3rd month after year-end (around March 15) - Sales Tax: 6% - Annual Statement due February 15 each year, $25 fee - Federal self-employment tax of 15.3% applies to net LLC profit regardless of state - Michigan automatically follows the federal S-Corp election with no separate state form. The election has no effect on FTE Tax eligibility — S-corps can make the same optional FTE election as partnerships. - Same-day formation and compliance filing available through LLC Attorney at no markup on state fees Michigan keeps LLC taxation genuinely simple: a flat 4.25% personal income tax on pass-through profit, no mandatory franchise tax, and a $25 Annual Statement that's one of the cheapest recurring compliance costs in the country. There's no bracket-planning to do, since every dollar of profit is taxed at the same rate. This guide covers exactly what a Michigan LLC owes in 2026 — state and federal tax obligations, the Annual Statement's unusually forgiving 2-year grace period, the optional Flow-Through Entity Tax election, and when an S-Corp election is worth the added payroll complexity. 4.25%Flat state income tax 6%State sales tax rate $25Annual Statement fee 0Mandatory franchise/minimum tax ## Michigan Personal Income Tax on LLC Profit By default, a Michigan LLC is a pass-through entity — the LLC itself doesn't pay federal or Michigan income tax. Profit flows through to the owners' personal returns, taxed once at the federal level and once at Michigan's flat 4.25% rate, with no brackets to plan around. **Michigan's rate: Flat 4.25%** The rate is re-certified every year against a statutory trigger tied to General Fund revenue growth versus inflation. It dipped to 4.05% for 2023 only (courts ruled that was a one-year-only reduction), then reverted to 4.25% for 2024 through 2026. ## Michigan's Flow-Through Entity (FTE) Tax Michigan has no mandatory franchise tax or minimum LLC fee. The old Michigan Business Tax (which had a gross-receipts component) was repealed in 2011 and replaced by the Corporate Income Tax, which applies only to C-corporations — pass-through LLCs are exempt. The only entity-level tax that touches an LLC is the optional Flow-Through Entity Tax election described above. This is purely optional — most Michigan LLCs owe nothing at the entity level beyond the $25 Annual Statement fee. The FTE Tax exists as a federal SALT-cap workaround: electing it lets the LLC pay Michigan tax at the entity level, generating a credit for owners who itemize federally. Michigan automatically follows the federal S-Corp election with no separate state approval and no additional forced tax beyond the optional FTE election. ## Michigan Sales Tax Michigan is one of the few states with no local sales tax add-on at all — 6% is the rate everywhere in the state, with no county or city layering on top. Most retail goods and specifically enumerated services require registration and collection. - State rate: **6%** - Registration: Michigan Treasury Online (MTO) registration, No fee fee with the Michigan Department of Treasury - Treasury assigns your filing frequency (monthly, quarterly, or annual) based on your estimated annual sales tax liability. ## Michigan Annual Report Requirement Michigan requires every LLC to file Annual Statement with the Michigan Department of Licensing and Regulatory Affairs (LARA), due February 15 each year. Filing fee: $25. Michigan is unusually forgiving here — no late fee accrues until you're 2 full years past due, at which point the LLC loses good standing and can be administratively dissolved. Reinstatement requires filing every delinquent Annual Statement plus the accumulated fees through LARA before the LLC is restored to good standing. ## Federal Self-Employment Tax and How Your Michigan LLC Is Classified Regardless of which state you're in, LLC owners who materially participate in the business owe federal self-employment tax — 15.3% on net profit, covering Social Security (up to the $184,500 (2026) wage base) and Medicare (no cap). ### Single-Member LLCs A single-member Michigan LLC defaults to a disregarded entity — you report income and expenses on Schedule C of your personal Form 1040 and compute self-employment tax on Schedule SE. ### Multi-Member LLCs A multi-member Michigan LLC defaults to partnership taxation, filing Form 1065 and issuing each member a Schedule K-1. Michigan has no separate filing consequence tied to member count — both structures owe no mandatory state entity tax either way. ## Should Your Michigan LLC Elect S-Corp Taxation? An S-Corp election lets you split LLC profit into a reasonable salary (payroll-taxed) and distributions (not subject to self-employment tax), once the business is consistently profitable enough to justify the added payroll complexity. **Michigan's treatment:** Michigan automatically follows the federal S-Corp election with no separate state form. The election has no effect on FTE Tax eligibility — S-corps can make the same optional FTE election as partnerships. Because Michigan's flat 4.25% rate applies identically to wages and pass-through income, S-Corp election here is primarily a federal self-employment-tax play — there's no additional state incentive or penalty layered on top, unlike states with graduated brackets or mandatory entity-level S-Corp taxes. ## Michigan LLC Tax Costs at a Glance Tax / Fee Amount Notes Flow-Through Entity (FTE) Tax (Form 5772) 4.25% of positive business income if elected; $0 if not elected Due Election due the 15th day of the 3rd month after year-end (around March 15) Annual Statement $25 Due February 15 each year; late penalty applies if missed Sales Tax 6% State-level rate Federal self-employment tax 15.3% Applies to net profit up to the $184,500 (2026) Social Security wage base (Medicare portion has no cap) State personal income tax (on your share of LLC profit) Flat 4.25% The rate is re-certified every year against a statutory trigger tied to General Fund revenue growth versus inflation. It dipped to 4.05% for 2023 only (courts ruled that was a one-year-only reduction), then reverted to 4.25% for 2024 through 2026. Michigan registered agent (professional service) $49–$300/yr LLC Attorney service available ## How to Handle Your Michigan LLC's Taxes ### If You Do It Yourself **Step 1 — Get your federal EIN before anything else.** Apply for your EIN for free directly at irs.gov — a purely federal application with no Michigan-specific step. **Step 2 — Confirm your default federal tax classification.** A single-member LLC defaults to a disregarded entity (Schedule C); a multi-member LLC defaults to partnership taxation (Form 1065 plus Schedule K-1 for each member). Neither requires a separate election — this is automatic unless you file Form 8832 or Form 2553 to change it. **Step 3 — Register with the Michigan Department of Treasury if required for state income tax withholding or estimated payments.** The rate is re-certified every year against a statutory trigger tied to General Fund revenue growth versus inflation. It dipped to 4.05% for 2023 only (courts ruled that was a one-year-only reduction), then reverted to 4.25% for 2024 through 2026. **Step 4 — Register for sales tax if you sell taxable goods or services.** File Michigan Treasury Online (MTO) registration with the Michigan Department of Treasury at michigan.gov/treasury (Michigan Treasury Online), No fee fee. Treasury assigns your filing frequency (monthly, quarterly, or annual) based on your estimated annual sales tax liability. **Step 5 — Register for payroll/reemployment tax the moment you hire your first employee.** The moment you hire your first employee, register with the Michigan Unemployment Insurance Agency. The 2026 new-employer rate is 2.7% (5.0% for new construction employers) on the first $9,000 of each employee's wages ($9,500 for delinquent employers). **Step 6 — Set up quarterly estimated tax payments.** If you expect to owe $1,000 or more in combined federal and Michigan tax for the year, both the IRS and Michigan Treasury expect quarterly estimated payments covering income tax and federal self-employment tax on your LLC profit. **Step 7 — Calendar your Flow-Through Entity (FTE) Tax due date.** Flow-Through Entity (FTE) Tax (Form 5772) is due Election due the 15th day of the 3rd month after year-end (around March 15), 4.25% of positive business income if elected; $0 if not elected. Missing it puts your LLC in bad standing with the Michigan Department of Treasury. **Step 8 — File your Annual Statement every Michigan deadline.** Annual Statement is due February 15 each year with the Michigan Department of Licensing and Regulatory Affairs (LARA), $25 fee. **Step 8 — Decide whether an S-Corp election makes sense once your LLC is consistently profitable.** Because Michigan's flat 4.25% rate applies identically to wages and pass-through income, S-Corp election here is primarily a federal self-employment-tax play — there's no additional state incentive or penalty layered on top, unlike states with graduated brackets or mandatory entity-level S-Corp taxes. **Step 9 — Watch for Michigan-specific tax traps.** Michigan's 2-year grace period before dissolution is unusually lenient, but it also lulls owners into treating the Annual Statement as optional — it isn't, and the risk still compounds the longer it's ignored. Multi-member LLCs and S-corps with owners who itemize federally should also revisit the optional FTE Tax election each year, since it's a real, if underused, SALT-cap planning tool. **Step 10 — Keep business and personal finances completely separate.** Commingling funds is the single biggest reason courts pierce the LLC liability shield, and it also makes tax preparation far more error-prone. Run all business income and expenses through a dedicated business bank account and keep receipts. Ready to Launch Your Business in Michigan?Follow our fast, easy process to get started right now.[Start My Business](https://app.llcattorney.com/formation?intake_type=formation) ### If LLC Attorney Does It for You 1. Submit your information at llcattorney.com — entity classification, expected revenue, and whether you'll be hiring employees or collecting sales tax. 2. LLC Attorney obtains your EIN, registers you with the Michigan Department of Treasury and Michigan Department of Treasury as needed, and sets up your compliance calendar for Annual Statement and Flow-Through Entity (FTE) Tax. 3. Receive reminders before every deadline through your client portal, plus access to flat-fee attorney consultations (no retainer) when an S-Corp election or multi-state question needs a licensed professional's judgment call. ## When Should You Talk to a Tax Professional About Your Michigan LLC? Michigan's tax picture is relatively simple, but a CPA is worth consulting when deciding whether your profit level justifies an S-Corp election, whether the optional Flow-Through Entity Tax election makes sense for your ownership structure, or if you've let Annual Statements lapse and need to catch up before the 2-year dissolution window closes. ## What You Actually Get With LLC Attorney's Michigan Compliance Service A $25 Annual Statement is easy to forget precisely because it's so cheap — but a lapsed LLC still risks losing its liability shield once the 2-year grace period runs out. LLC Attorney's Michigan service keeps every deadline on your radar. - EIN obtained for you at no extra charge. - State tax and sales tax registration handled as part of formation, starting at $49. - An ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) tracks every Michigan deadline — Annual Statement, Flow-Through Entity (FTE) Tax, and registered agent renewal. - Access to professionally trained Business Success Advisors at no charge, plus flat-fee attorney consultations (no retainer) for S-Corp election analysis and multi-state nexus questions. Michigan's flat-rate simplicity doesn't mean compliance runs itself — LLC Attorney keeps your Annual Statement current so a $25 filing never turns into a dissolved LLC. ## Get Your Michigan LLC's Taxes Set Up Correctly Getting your EIN, tax registrations, and compliance calendar right from day one prevents expensive corrections later. LLC Attorney's Michigan formation service starts at $49, and an ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) keeps you ahead of every deadline after that. See our [full pricing](/pricing) for all service tiers. Ready to Launch Your Business in Michigan?Follow our fast, easy process to get started right now.[Start My Michigan LLC](https://app.llcattorney.com/formation?intake_type=formation) ## Frequently Asked Questions ### Does my Michigan LLC have to pay franchise tax? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) No, not a mandatory one. Michigan has no franchise or minimum tax on LLCs. Your only recurring state-level obligation is the $25 LARA Annual Statement. Michigan does offer an optional Flow-Through Entity Tax election (4.25% of business income) as a federal SALT-cap workaround, but it's elective, not required. ### Do I need to collect sales tax in Michigan? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Only if you sell taxable tangible personal property or enumerated services. Register for free through Michigan Treasury Online, then collect the flat 6% rate — Michigan has no local sales tax add-on anywhere in the state, so 6% is the rate no matter where you're located. ### What is the Michigan Annual Statement and when is it due? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Every Michigan LLC files an Annual Statement with LARA, due February 15 each year, for a $25 fee. Michigan gives an unusually generous 2-year grace period before a missed filing risks administrative dissolution. ### What happens if I miss a Michigan LLC tax or filing deadline? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Michigan doesn't charge an immediate late fee — you have a 2-year grace period after the February 15 deadline before the LLC loses good standing and risks administrative dissolution. Reinstatement requires filing every delinquent statement plus accumulated fees. ### Should my Michigan LLC elect S-Corp taxation? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) It depends on your profit level. Michigan's flat 4.25% rate applies the same to wages and distributions, so S-Corp election here is mostly about reducing federal self-employment tax — there's no additional state-level incentive or complication to factor in, beyond confirming your eligibility for the optional Flow-Through Entity Tax election. ### How is a single-member LLC taxed in Michigan? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) A single-member Michigan LLC defaults to a disregarded entity for federal tax purposes — you report income on Schedule C and pay self-employment tax via Schedule SE. Michigan adds its flat 4.25% income tax on top at the personal level. ### I operate in multiple states — which state's taxes apply to my LLC? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) If your LLC does business in a state other than the one it's formed in — an office, employees, inventory, or significant sales there — you may have created nexus requiring registration and tax obligations in that state too. This is fact-specific and worth a conversation with a tax professional if you operate in multiple states. ### How much will I actually pay in taxes on my Michigan LLC? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) For a typical Michigan LLC with in-state owners and no employees: a flat 4.25% state income tax on your share of profit, no mandatory franchise tax, just the $25 Annual Statement, plus federal income tax and 15.3% federal self-employment tax (up to the $184,500 Social Security wage base for 2026). Add 6% sales tax only if you sell taxable goods or services. ### Does LLC Attorney help with LLC tax compliance? ![icon](/_next/image?url=%2Fimages%2Ficons%2FfaqPlus.png&w=128&q=75) Yes. LLC Attorney's ongoing compliance subscription tracks your Michigan filing deadlines, handles your Annual Statement, and connects you with flat-fee attorney consultations (no retainer) when a tax question needs a licensed professional's judgment call. ## Learn More About Michigan - [Michigan LLC Formation](/states/mi/llc-formation-michigan) - [Michigan Registered Agent](/states/mi/registered-agent-michigan)