Taxes & Incentives SEDP is always available to discuss your project to identify the support programs that can help bring your project success. Some of the tools available include: Michigan Business Development Program (MBDP) The Michigan Business Development Program is available from the Michigan Strategic Fund (MSF), in cooperation with MEDC. The program is designed to provide grants, loans or other economic assistance to businesses for highly competitive projects in Michigan that create jobs and/or provide investment. Further information is available here. Jobs Ready Michigan The Jobs Ready Michigan program was created by the Michigan Strategic Fund to meet the talent needs of companies that are expanding or relocating to Michigan. The program is designed to be flexible and responsive to the specific talent needs of companies and to address the costs associated with recruiting and training individuals for occupations that are high-wage, high-skill, or high-demand. Program awards may be used for a variety of activities related to talent recruitment and job training including, but not limited to, employee recruitment expenses, development of customized training development plans, instructor and training materials costs, purchase of equipment related to training, construction of training facilities, and on-the job training costs. Industrial Facilities Tax Exemption Also known as PA 198, this program can provide 50% abatements for up to 12 years on real property for industrial processors and "high tech" companies and abatements up to 100% for rehabilitation projects. These are just a sample of the tools available for Shiawassee County and the State of Michigan to support your business. To learn more about what tools are available for your project, contact SEDP today. (link final phrase to contact page). Jobs Ready Michigan The Jobs Ready Michigan program was created by the Michigan Strategic Fund to meet the talent needs of companies that are expanding or relocating to Michigan. The program is designed to be flexible and responsive to the specific talent needs of companies and to address the costs associated with recruiting and training individuals for occupations that are high-wage, high-skill, or high-demand. Program awards may be used for a variety of activities related to talent recruitment and job training including, but not limited to, employee recruitment expenses, development of customized training development plans, instructor and training materials costs, purchase of equipment related to training, construction of training facilities, and on-the job training costs. Industrial Facilities Tax Exemption Also known as PA 198, this program can provide 50% abatements for up to 12 years on real property for industrial processors and "high tech" companies and abatements up to 100% for rehabilitation projects. These are just a sample of the tools available for Shiawassee County and the State of Michigan to support your business. To learn more about what tools are available for your project, contact SEDP today. (link final phrase to contact page). Taxes Taxes Michigan lawmakers approved significant corporate tax reform that went into effect at the beginning of 2012. They sanctioned a significant package of corporate tax changes. Most importantly, they eliminated the GRT, implemented a flat 6% net income tax, and broadened the tax base by eliminating tax preferences. State Tax Climate Significant policy changes have been behind Michigan’s economic recovery. Since elected to office in 2000, Governor Rick Snyder has enacted key legislation to encourage investment and job creation in the state. Key measures include: Right-to-work legislation for Michigan’s private and public sectors went into effect on March 28, 2013 Significant tax reforms which went into effect in early 2012 Eliminated the Gross Receipts Tax Implemented a flat 6% net income tax Broadened the tax base by eliminating tax preferences Phase out of Personal Property Tax For more information on the tax reforms, visit www.taxfoundation.org/blog/michigan-implements-positive-corporate-tax-reform According to the Tax Foundation, Michigan’s total tax burden is nearly identical to the U.S. average. Michigan Tax Rate U.S. Average Tax Burden 8.27% 8.54% Source: Tax Foundation “Tax burden” is computed by totaling the amount of state and local taxes paid by state residents to both their own and other governments and then divide these totals by each state’s total income. State Tax Rates Michigan has moved to a flat 6% sales tax, effective in January 2012. Michigan Corporate Income Tax (Effective January 1, 2012) State Local Corporate Income Tax - applies to C Corporations only Pass-through entities like S corps, LLCs, partnerships and sole proprietors pay tax on business income under the personal income tax. 6% 0% Tax Base Federal Taxable Income (Apportioned) 0% Formula (e.g. Sales, Property & Payroll)/ Apportionment 100% Sales 0% Federal Taxes Deductible No Accelerated Depreciation Permitted (Yes or No) Yes Personal Income Tax Personal Income Tax State Local Rate (Range) 4.25% 0% Earned Income 4.25% 0% Unearned Income (e.g. Dividend) 4.25% 0% Local Occupation Tax (Paid by Employee) 0% 0% City Residents 0% Non-City Residents 0% Local Wage Tax (Paid by Employer) 0% 0% City Residents 0% Non-City Residents 0% Sales and Use Tax Sales/Use Tax State 6% Local 0% Total 6% Sales Tax Rate by Utility: Electric Power *Exempt Natural Gas *Exempt Oil Fuel *Exempt Water 0% Sewer 0% Hazardous Waste Disposal Contact SEDP *Exempt if used directly in manufacturing Source: Michigan Economic Development Corporation Machinery and Equipment Exemptions Machinery & Equipment Subject to Sales/Use Tax Production Exempt Non-Production Taxable Pollution Control Exempt Office Furniture/Fixtures/Equipment Taxable Sales/Use Tax (Yes or No) on Office Building Construction Materials Taxable Industrial Building Construction Materials Taxable Manufacturers' Raw Materials Exempt Standard Software Taxable Custom Software Exempt Intangible Property Describe What is Subject to Tax Rate (e.g. Accounts Exempt Receivable, Capital Stock) Exempt Basis & Rate Exempt Stock Bond Transaction Fee (Yes or No & its Yes Rate) Exempt Source: Michigan Economic Development Corporation Additional Real Property Taxes and Exemptions State Property Tax Effective Rate per $100 Real Property 6 Mills Personal Property (Non-Industrial) 6 Mills Personal Property (Industrial) Exempt Subject to Personal Property Tax Production Machinery & Equipment Reduced Rate Non Production Machinery & Equipment Taxable Pollution Control Exempt Inventory Exempt Raw Materials Exempt Work in Progress Exempt Finished Goods Exempt Freeport Legislation N/A Applicable to Warehousing N/A Applicable to Manufacturing N/A Goods Stored in a Public Warehouse N/A Office Furniture-Fixtures Reduced Rate Computer Equipment Reduced Rate Workstations Reduced Rate Telephones Reduced Rate Furniture Reduced Rate Company Vehicles Exempt Standard Software Taxable Custom Software Exempt * Industrial personal property is exempt from 24 mills and commercial personal property is exempt from 12 mills. State Tax Climate Significant policy changes have been behind Michigan’s economic recovery. Since elected to office in 2000, Governor Rick Snyder has enacted key legislation to encourage investment and job creation in the state. Key measures include: Right-to-work legislation for Michigan’s private and public sectors went into effect on March 28, 2013 Significant tax reforms which went into effect in early 2012 Eliminated the Gross Receipts Tax Implemented a flat 6% net income tax Broadened the tax base by eliminating tax preferences Phase out of Personal Property Tax For more information on the tax reforms, visit www.taxfoundation.org/blog/michigan-implements-positive-corporate-tax-reform According to the Tax Foundation, Michigan’s total tax burden is nearly identical to the U.S. average. Michigan Tax Rate U.S. Average Tax Burden 8.27% 8.54% Source: Tax Foundation “Tax burden” is computed by totaling the amount of state and local taxes paid by state residents to both their own and other governments and then divide these totals by each state’s total income. State Tax Rates Michigan has moved to a flat 6% sales tax, effective in January 2012. Michigan Corporate Income Tax (Effective January 1, 2012) State Local Corporate Income Tax - applies to C Corporations only Pass-through entities like S corps, LLCs, partnerships and sole proprietors pay tax on business income under the personal income tax. 6% 0% Tax Base Federal Taxable Income (Apportioned) 0% Formula (e.g. Sales, Property & Payroll)/ Apportionment 100% Sales 0% Federal Taxes Deductible No Accelerated Depreciation Permitted (Yes or No) Yes Personal Income Tax Personal Income Tax State Local Rate (Range) 4.25% 0% Earned Income 4.25% 0% Unearned Income (e.g. Dividend) 4.25% 0% Local Occupation Tax (Paid by Employee) 0% 0% City Residents 0% Non-City Residents 0% Local Wage Tax (Paid by Employer) 0% 0% City Residents 0% Non-City Residents 0% Sales and Use Tax Sales/Use Tax State 6% Local 0% Total 6% Sales Tax Rate by Utility: Electric Power *Exempt Natural Gas *Exempt Oil Fuel *Exempt Water 0% Sewer 0% Hazardous Waste Disposal Contact SEDP *Exempt if used directly in manufacturing Source: Michigan Economic Development Corporation Machinery and Equipment Exemptions Machinery & Equipment Subject to Sales/Use Tax Production Exempt Non-Production Taxable Pollution Control Exempt Office Furniture/Fixtures/Equipment Taxable Sales/Use Tax (Yes or No) on Office Building Construction Materials Taxable Industrial Building Construction Materials Taxable Manufacturers' Raw Materials Exempt Standard Software Taxable Custom Software Exempt Intangible Property Describe What is Subject to Tax Rate (e.g. Accounts Exempt Receivable, Capital Stock) Exempt Basis & Rate Exempt Stock Bond Transaction Fee (Yes or No & its Yes Rate) Exempt Source: Michigan Economic Development Corporation Additional Real Property Taxes and Exemptions State Property Tax Effective Rate per $100 Real Property 6 Mills Personal Property (Non-Industrial) 6 Mills Personal Property (Industrial) Exempt Subject to Personal Property Tax Production Machinery & Equipment Reduced Rate Non Production Machinery & Equipment Taxable Pollution Control Exempt Inventory Exempt Raw Materials Exempt Work in Progress Exempt Finished Goods Exempt Freeport Legislation N/A Applicable to Warehousing N/A Applicable to Manufacturing N/A Goods Stored in a Public Warehouse N/A Office Furniture-Fixtures Reduced Rate Computer Equipment Reduced Rate Workstations Reduced Rate Telephones Reduced Rate Furniture Reduced Rate Company Vehicles Exempt Standard Software Taxable Custom Software Exempt * Industrial personal property is exempt from 24 mills and commercial personal property is exempt from 12 mills.
