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S-corp election in Michigan

In short

No Corporate Income Tax, no franchise tax, no gross receipts tax on an S corp. The only Michigan entity-level income tax is the ELECTIVE flow-through entity (FTE) tax at 4.25% for 2026. Recurring non-income obligation: the LARA annual report, Form CSCL/CD-2500, $25 if filed on time by May 15.

Does Michigan recognize the federal S election?

Michigan automatically recognizes the federal S election — there is no separate Michigan S-corporation election. Michigan's Corporate Income Tax applies to C corporations; "A flow-through entity is defined as an S corporation or a partnership under the internal revenue code for federal income tax purposes," and flow-through income is taxed to the owners on the MI-1040 at the individual rate (4.25% for 2026). The S corp itself files no Michigan income tax return unless it elects the flow-through entity tax. Entities disregarded for federal purposes (such as single-member LLCs) and LLCs that file federal returns as corporations are NOT eligible flow-through entities.

Tax the entity still owes

(1) CORPORATE INCOME TAX: Michigan's 6% CIT applies to C corporations only; quarterly returns due April 15, July 15, October 15 and January 15, with the annual return due April 30 for calendar-year filers (last day of the fourth month after year end for fiscal filers). A federal S corp is not a CIT taxpayer. (2) NO FRANCHISE, NET WORTH, OR GROSS RECEIPTS TAX. (3) ELECTIVE FLOW-THROUGH ENTITY TAX (the only entity-level income tax an S corp can owe): "the Michigan FTE tax is levied on qualifying/electing entities at the same rate as Michigan individual income tax (IIT) is levied on individuals." The 2026 rate is 4.25% — on April 15, 2026 the State Treasurer and the House and Senate Fiscal Agency directors published the statutorily required calculation and determined that general fund growth did not exceed inflation (total general fund revenue decreased 1.56% against 2.70% inflation for the period), so no rate adjustment was required and "the individual income tax rate for the 2026 tax year will remain at 4.25%." The FTE tax is levied only on the Michigan portion of the POSITIVE business income tax base attributable to direct members who are individuals, fiduciaries, or other flow-through entities; the portion attributable to insurance companies, financial institutions, or C corporation members is not subject to it. If the business income tax base is less than zero, no tax is due. (4) LARA ANNUAL REPORT: Form CSCL/CD-2500 for profit and professional service corporations — $25 if received on time (May 15 deadline), then $35 (May 16–31), $45 (June 1–30), $55 (July 1–31), $65 (August 1–31), $75 maximum (September 1 or after). LLCs and PLLCs file Form CSCL/CD-2700 annual statement: $25 LLC / $75 PLLC, with a $50 late fee for PLLCs received after February 15. Failure to file results in automatic dissolution or withdrawal under the Act, after notice to the resident agent. (5) DECOUPLING: PA 24 of 2025 requires Michigan taxpayers to decouple from several IRC provisions enacted by the federal One Big Beautiful Bill Act, generally starting with tax year 2025; see Form 5772 line 11 for the decoupling calculation.

Registering for payroll

One registration covers two agencies. Register with the Michigan Department of Treasury using Form 518, Registration for Michigan Taxes (or register online through Michigan Treasury Online) — this opens the employer withholding account AND registers the employer with the Michigan Unemployment Insurance Agency (UIA). FILING: withholding returns and payments are due monthly, quarterly, or annually as Treasury assigns each year; monthly filers by the 20th of the following month; quarterly filers by the 20th of the month after the quarter (April 20, July 20, October 20, January 20); "All filers must also submit an annual return by February 28, regardless of assigned filing frequency." Accelerated filers make a pre-payment by the 20th of the current month plus a reconciliation payment by the 20th of the next month. Michigan uses Form 5080 for the monthly/quarterly Sales, Use and Withholding return and Form 5081 for the annual SUW return; payments through MTO. If a due date falls on a weekend or state holiday, the return and payment are due the next business day. ALSO: several Michigan cities levy a local income tax (Detroit, Grand Rapids, Lansing, Flint, Saginaw and others) with their own employer withholding registration and returns — Detroit withholding is administered through the Michigan Department of Treasury.

Annual filings

Form 5772, Michigan Flow-Through Entity Tax Annual Return, with Form 5774 (member schedule) — ONLY if the FTE election was made; due the last day of the third month after the tax year ends (March 31 for calendar-year filers); must be filed electronically through MTO. Quarterly FTE estimated payments (April 15, June 15, September 15, January 15) when annual liability is expected to exceed $800. Member reporting: on or before the FTE annual return due date the entity must separately report to each member the allocation and apportionment information, the member's allocable share of taxes added back in computing the business income tax base, any share of FTE refunds received, and the member's share of FTE tax paid by the 15th day of the third month after year end — there is no prescribed format; notes attached to the federal Schedule K-1 are acceptable. If no FTE election is made, the S corp files no Michigan entity income tax return; owners report on the MI-1040. LARA Form CSCL/CD-2500 Profit Corporation Annual Report — due May 15, $25 on time (escalating late fees to $75). Withholding Forms 5080 (monthly/quarterly) and 5081 (annual, due February 28) through MTO; W-2 and 1099 income record forms per Treasury's Income Record Form Remittance Guide. UIA quarterly wage and tax reports. City income tax returns and withholding where applicable.

Pass-through entity tax

YES — the Michigan flow-through entity tax (PA 135 of 2021, MCL 206.813 et seq.), retroactive to tax years beginning on and after January 1, 2021. Rate equals the Michigan individual income tax rate: 4.25% for 2026. Members receive a REFUNDABLE Michigan income tax credit. THE ELECTION MECHANICS ARE THE WHOLE GAME: "The election must be made by submitting an electronic payment to the Treasury through Michigan Treasury Online (MTO). Any other manner of making the election (e.g., submitting a written election statement or making a payment outside of MTO) is not a valid election." "The election is effective for three years: the tax year in which the payment is made and the next two successive years. The election payment must be directed to the initial year of the election. Once the election is made it is irrevocable." A new election is required after the three-year period expires. ELECTION DEADLINE: for tax years 2021–2023 it was the 15th day of the 3rd month of the tax year (MCL 206.813); "PA 216 modifies the statutory election deadline to provide more time... For tax years beginning on and after January 1, 2024, the deadline has been moved to the last day of the 9th month after the end of the tax year (e.g., September 30 for calendar year filers)." A newly formed entity or a corporation making a mid-year S election with a short tax year uses the beginning date of its FEDERAL taxable year to determine its Michigan tax year and election deadline. ANNUAL RETURN: Form 5772, due the last day of the third month after the end of the tax year (March 31 for calendar-year filers), filed electronically through MTO only — returns submitted outside MTO will not be accepted. Form 5774 reports members. Extensions are requested on MTO by the return due date with payment. ESTIMATES: required each year the annual liability is reasonably expected to exceed $800; calendar-year installments due April 15, June 15, September 15 and January 15. Under PA 216, penalty and interest are generally not assessed for quarterly estimates due BEFORE the taxpayer makes a valid election (effective April 2, 2025, MCL 206.831(2)(b)), but the taxpayer must catch up by the first quarterly due date following the election. CREDIT FUNDING DEADLINE: for FTE tax years beginning on or after January 1, 2024, members claim 100% of their credits for the same tax year if the entity pays by the return due date including extension; tax paid later pushes the credit to a later member tax year. An entity that elects after the return due date is presumed to have validly requested an extension (MCL 206.833), but still owes penalty and interest on tax paid after the election date, and must pay its full first-year annual liability the day it elects. SALT-CAP CONTINGENCY — IMPORTANT: "The continued levy of the tax is contingent upon the existence of the federal state and local tax (SALT) deduction limitation codified within IRC 164(b)(6)(B)." The federal SALT cap survived the One Big Beautiful Bill Act, so the Michigan FTE tax continues for 2026 — but it would automatically cease if Congress repealed the cap. OB3 RELIEF: because OBBBA's SALT changes altered the calculus, Treasury has issued a notice offering limited relief allowing electing flow-through entities to request a refund of FTE payments for a tax period (including estimated and extension payments) by written request containing the entity name, address, FEIN, tax year, payment amounts and confirmation numbers, signed by an authorized owner, officer or partner with title.

The mistake owners make most often in Michigan

Thinking you made the flow-through entity tax election when you didn't — and then discovering you're locked in for three years when you did. Michigan accepts the FTE election ONLY as an electronic payment submitted through Michigan Treasury Online and directed to the initial election year. A written election statement, a check mailed to Treasury, or a payment made anywhere other than MTO is expressly not a valid election, and the entity discovers the failure only when its members' refundable credits are denied. The mirror-image trap is worse: once the payment goes through MTO, the election is IRREVOCABLE and binds the entity for three tax years — the election year plus the next two. Owners elect for one favorable year and then owe entity-level Michigan tax in years two and three whether or not it still helps them. Michigan Treasury is currently offering limited written-request refund relief for entities that elected in before the One Big Beautiful Bill Act changed the SALT math, which is a good indication of how many taxpayers got caught. Note also that the FTE tax itself is contingent on the continued existence of the federal SALT cap under IRC 164(b)(6)(B).

Filing your federal Form 2553

Businesses operating in Michigan send Form 2553 to the IRS Kansas City service center — fax 855-887-7734. Full address and filing checklist for Michigan.

Frequently asked questions

Does Michigan require a separate S-corporation election?

No. Michigan does not require a separate state election. Michigan automatically recognizes the federal S election — there is no separate Michigan S-corporation election. Michigan's Corporate Income Tax applies to C corporations; "A flow-through entity is defined as an S corporation or a partnership under the internal revenue code for…

What tax does an S corporation pay in Michigan?

Where do I file Form 2553 from Michigan?

With the IRS Kansas City service center. Fax 855-887-7734, or mail to Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999.

What is the most common S-corp mistake in Michigan?

Compare with other states: Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada.

Sources

File your Form 2553 correctly

Scorply completes your federal election and includes a Michigan guide in your packet, so you know exactly what else you owe here.

Start my Form 2553

Researched from official Michigan sources and verified July 30, 2026. State tax rules change. This is general information, not tax advice — confirm with the state or a CPA before you rely on it.