Michigan · LLC tax election
Michigan LLC: S corp or C corp?
Michigan's corporate tax skips S corporations, and the state offers an elective entity-level tax instead.
See Michigan at a glanceShort answer
Michigan generally does not tax S corporations under its 6% corporate income tax; the profit passes to you. A C corporation pays that flat 6%. Michigan also lets a flow-through entity elect to pay tax at the individual rate at the entity level, which can help owners who want to deduct state tax federally.
Last checked .Michigan at a glance
| Question | Michigan |
|---|---|
| S election recognized? | Yes, Michigan follows the federal election1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | None at the entity level3 |
| C corp rate and minimum | 6% flat4 |
| Entity tax on a default LLC | None for a default LLC5 |
| Personal income tax | Yes, on wages and pass-through income6 |
What is different about Michigan?
Michigan keeps the two worlds apart. The corporate income tax is a flat 6% and is aimed at C corporations and entities taxed as corporations. Flow-through entities, including S corporations, partnerships and trusts, generally are not taxpayers under it. So electing S status takes your company out of the 6% and moves the profit to your personal Michigan return. The twist is the flow-through entity tax: an S corporation or partnership can elect to pay tax on certain income at the individual rate, and members then get a refundable credit. The election runs for the year you make it plus the next two, so treat it as a multi-year decision.
Does Michigan recognize a federal S corp election?
Michigan generally does not treat an S corporation as a taxpayer under the corporate income tax. Profit passes through to the owners' returns. An S corporation can instead elect the flow-through entity tax, paying tax at the individual rate on the Michigan share of its income; members then claim a refundable credit. The election lasts for the election year and the next two. We did not find a separate Michigan S election form or an entity-level tax beyond the optional one.
Does my LLC need a separate Michigan election or form?
Michigan has no separate S election and an S corporation generally files no Michigan corporate income tax return, because the corporate income tax applies only to entities that file federally as C corporations (or insurance companies and financial institutions).2
What does Michigan tax an S corp or LLC at the entity level?
- Michigan does not tax an S corporation under its corporate income tax; flow-through entities generally are not taxpayers.3
- Michigan's corporate income tax generally does not apply to flow-through entities such as partnerships, so an LLC taxed that way pays no entity-level income tax.5
- Michigan's corporate income tax has one credit, the small business alternative credit, which offers an alternate tax rate of 1.8% of adjusted business income.7
- Taxpayers with less than $350,000 in allocated or apportioned gross receipts, or $100 or less in annual liability, are not required to file or pay the CIT.8
Is a Michigan LLC taxed as a C corp ever better?
Michigan's corporate income tax is a flat 6% on a C corporation's Michigan income. There is a small business alternative credit that offers an alternate rate of 1.8% of adjusted business income. Dividends paid to you are taxed again on your return. Companies under the filing threshold of $350,000 in Michigan gross receipts may owe nothing, though that threshold is aimed at out-of-state companies.
Run your Michigan numbers
In Michigan the S election pays when you want profit out of the 6% corporate tax. The flow-through entity tax is an extra option: it lets the company pay at the individual rate, which can matter if you want the state tax paid at entity level. It is optional and locks in for three tax years, so compare before you elect.
Result
How much would a Michigan LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 + Michigan LLC tax $0 | $21,194self-employment tax $21,194 + Michigan LLC tax $0 |
| S corp | $9,344payroll tax $7,344 + Michigan S corp tax $0 + $2,000 payroll and prep | $15,770payroll tax $13,770 + Michigan S corp tax $0 + $2,000 payroll and prep |
| C corp | $17,581payroll tax $7,344 + Michigan tax $1,920 + federal $6,317 + $2,000 payroll and prep | $31,214payroll tax $13,770 + Michigan tax $3,600 + federal $11,844 + $2,000 payroll and prep |
Assumes a 60% salary10 and a single filer. Income tax is left out. C corp dividends are taxed again.
When is the Form 2553 deadline for a Michigan LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on Michigan: How to start a Michigan LLC · How to start a Michigan corporation · Michigan LLC cost · Michigan annual report · Annual report late fees by state
File the S-Corp Election for your Michigan LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
Does Michigan tax S corporations?
Generally no, under the corporate income tax. Michigan's Treasury says flow-through entities, including S corporations, generally are not taxpayers under the CIT unless they elect or are required to file as C corporations. The owners pay on their own returns.
What is the Michigan corporate income tax rate?
6%, flat, on C corporations and entities taxed as corporations federally. A small business alternative credit offers an alternate rate of 1.8% of adjusted business income for those who qualify.
What is the Michigan flow-through entity tax?
An elective tax an S corporation or partnership can pay on its Michigan income at the individual income tax rate. Members then get a refundable credit. Treasury's FAQ gives 4.25% as the rate for tax year 2021; confirm the current year's rate.
How long does the Michigan flow-through election last?
It continues for the tax year of election plus the next two subsequent years, per Treasury's FAQ. Plan on a three-year commitment, and check the current election deadline on michigan.gov before the year starts.
Sources 11 links, checked Nov 6, 2026
- Michigan generally does not tax S corporations under its corporate income tax; the income passes through to the owners. michigan.gov, checked Nov 6, 2026
- Michigan has no separate S election and an S corporation generally files no Michigan corporate income tax return, because the corporate income tax applies only to entities that file federally as C corporations (or insurance companies and financial institutions). michigan.gov, checked Nov 6, 2026
- Michigan does not tax an S corporation under its corporate income tax; flow-through entities generally are not taxpayers. michigan.gov, checked Nov 6, 2026
- Michigan's corporate income tax is 6% on a C corporation's Michigan income. michigan.gov, checked Nov 6, 2026
- Michigan's corporate income tax generally does not apply to flow-through entities such as partnerships, so an LLC taxed that way pays no entity-level income tax. michigan.gov, checked Nov 6, 2026
- Michigan taxes individual income, and the rate used for the optional flow-through entity tax is the individual rate. michigan.gov, checked Nov 6, 2026
- Michigan's corporate income tax has one credit, the small business alternative credit, which offers an alternate tax rate of 1.8% of adjusted business income. michigan.gov, checked Nov 6, 2026
- Taxpayers with less than $350,000 in allocated or apportioned gross receipts, or $100 or less in annual liability, are not required to file or pay the CIT. michigan.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.