Corporate Income Tax and Michigan Business Tax - 271-0240-25
Agency Description
Public Act 122 of 1941, as amended (the Revenue Act), provides the Department of Treasury with the authority to collect State taxes, assessments, fees, and other money.
The Michigan Business Tax (MBT) became effective January 1, 2008 and replaced the single business tax. MBT assesses a tax on every business with business activity in Michigan and apportioned gross receipts over $350,000. The base of the tax starts with federal taxable income or a comparable measure of income for partnerships and S corporations, which would then be subject to various adjustments, including apportionment, to identify business activity in Michigan. The MBT tax rate equals 4.95%.
The Corporate Income Tax (CIT) replaced MBT, effective January 1, 2012. Unlike MBT, which levies a tax on all businesses regardless of how they are organized, CIT imposes a 6% tax on C corporations and taxpayers taxed as corporations federally that have business activity in Michigan and apportioned gross receipts over $350,000. Flow-through entities, including S corporations, partnerships, and trusts, generally are not required to pay taxes or file returns under CIT. Insurance companies and financial institutions file separate CIT returns and pay a tax on a different basis than other CIT filers.
Taxpayers with certificated credits may elect to continue filing an MBT return until the taxpayer exhausts those credits. The MBT election, along with any outstanding certificated credits, expires after tax year 2031.
Treasury requires CIT taxpayers expecting a liability greater than $800 to submit estimated payments throughout the year. When a CIT annual return is filed, taxpayers may choose to obtain a refund if an overpayment of tax exists or have the State hold the amount as a credit forward against future tax obligations.
In fiscal year 2024, CIT and MBT revenue (net of refunds) totaled $2.1 billion and $(355.1) million, respectively. As of June 2025, the outstanding CIT credit forward balance was $995.2 million.
Audit Objectives
- To assess the effectiveness of Treasury’s efforts to timely process CIT and MBT returns.
- To assess the effectiveness of Treasury’s efforts to accurately process CIT and MBT returns.
- To assess the sufficiency of Treasury’s efforts to identify and pursue delinquent filers of CIT and MBT.
- To assess the measurability of an estimated liability related to CIT credit forward balances in accordance with generally accepted accounting principles.
Timing
Estimated Release Date: Mid 2026
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