Michigan Corporate Income Tax: A 2026 Guide for Business Owners

If your business operates as a C corporation in Michigan, or you're considering expanding into the state, understanding the Michigan Corporate Income Tax (CIT) is essential. Michigan's CIT replaced the Michigan Business Tax in 2012, establishing a straightforward 6% flat tax on corporate income. However, several thresholds, credits, and recent legislative changes can significantly impact your tax liability.

At Revonary, we help business owners across Michigan and the surrounding states navigate multi-state tax obligations. Here's what you need to know about Michigan's CIT for 2026.

Who Must Pay Michigan's Corporate Income Tax?

The CIT applies to C corporations and entities taxed as corporations for federal purposes. Pass-through entities like S corporations, partnerships, and LLCs are generally not subject to the CIT, though they may elect into Michigan's Flow-Through Entity Tax instead.

Insurance companies pay a separate premiums tax (1.25% of gross direct premiums), while financial institutions pay 0.29% of their net capital rather than the standard CIT.

The $350,000 Gross Receipts Threshold

Not every corporation operating in Michigan must file a CIT return. Taxpayers with less than $350,000 in gross receipts allocated or apportioned to Michigan (or with annual CIT liability of $100 or less) are exempt from filing and payment requirements.

This threshold does not apply to financial institutions or insurance companies, which must file regardless of their gross receipts level. For more details, see Michigan's filing requirements.

Understanding the 6% Tax Rate

Michigan imposes a flat 6% tax on the corporate income tax base after allocation and apportionment. The state uses single-factor apportionment based solely on sales sourced to Michigan, meaning only the portion of your income attributable to Michigan sales is taxed.

For service businesses, including medical practices, law firms, and consulting firms, Michigan applies market-based sourcing, meaning revenue is sourced to where the benefit of the service is received.

One important development: In October 2025, Michigan enacted HB 4961, decoupling from several federal tax provisions under the One Big Beautiful Bill Act. This means Michigan does not recognize 100% bonus depreciation, and R&D expenses must still be amortized over five years for state purposes even if expensed federally.

Quarterly Estimated Payments

Taxpayers expecting CIT liability exceeding $800 must make quarterly estimated payments using Form 4913 or through Michigan Treasury Online.

Calendar year due dates:

• First Quarter: April 15
• Second Quarter: July 15
• Third Quarter: October 15
• Fourth Quarter: January 15
• Annual Return: April 30

To avoid underpayment penalties, estimated payments generally must equal at least 85% of the current year liability or 100% of the prior year liability if that prior year liability was $20,000 or less. Penalties for underpayment start at 5% for the first two months and increase by 5% per month thereafter, up to a maximum of 25%.

The Small Business Alternative Credit at 1.8%

Qualifying small businesses can significantly reduce their effective tax rate through the small business alternative credit, which allows eligible taxpayers to pay just 1.8% of adjusted business income instead of the standard 6%.

Eligibility requirements (all must be met):

• Gross receipts not exceeding $20 million
• Adjusted business income not exceeding $1.3 million
• No officer or shareholder with allocated income (compensation plus share of business income) exceeding certain thresholds

These thresholds are indexed annually for inflation, so it's important to verify current limits with the Michigan Department of Treasury or your tax advisor each year.

The credit is calculated on Form 4893 and is not available to insurance companies or financial institutions. For unitary business groups, these thresholds are calculated at the group level.

How Revonary Can Help

Michigan's Corporate Income Tax presents both compliance obligations and planning opportunities for business owners. From evaluating whether you meet the small business alternative credit thresholds to navigating quarterly payment requirements across multiple states, the details matter.

At Revonary, we specialize in helping service businesses—including healthcare professionals, attorneys, and consultants—develop tax strategies that minimize liability while maintaining compliance.

Ready to discuss your Michigan tax obligations? Contact us today to schedule a consultation.