Michigan Payroll Updates - November 2024

Week Of 11.21.2024

Michigan Corporate Income Tax—Michigan issues 2025 withholding tax tables.

The Michigan Department of Treasury has issued the withholding tax tables for 2025. (2025 Income Tax Withholding Tables, Mich. Dept. Treas., 01/01/2025.)

Michigan General Administrative Provisions—Michigan announces no changes to Detroit income tax payments as city explores cryptocurrency.

The Michigan Department of Treasury has issued a clarification in response to a recent announcement by the City of Detroit that in mid-2025 it will begin accepting cryptocurrency for current year property tax payments (see State Tax Updates, 11/13/2024). At this time, there is no change to City of Detroit income tax payments, which is paid to the Department and must be made in U.S. currency. The Department is continually exploring innovative payment solutions for taxpayers. The City Income Tax Act (CITA) allows Michigan cities to enter into agreements with the Department to administer a city’s income tax, and in 2016, the Department began processing the City of Detroit’s income tax returns. Currently, the Department receives all returns and payments for City of Detroit individual income tax, employer withholding tax, corporate income tax, partnership tax, and fiduciary income taxes. (Notice: No Changes to City Income Tax Payments as Detroit Explores Cryptocurrency for Property Taxes, Mich. Dept. Treas., 11/20/2024.)

Michigan Personal Income Tax—Michigan issues 2025 withholding tax tables.

The Michigan Department of Treasury has issued the withholding tax tables for 2025. (2025 Income Tax Withholding Tables, Mich. Dept. Treas., 01/01/2025.)

Michigan Property Tax—Michigan court holds Detroit drainage fee is user fee, not illegal tax.

In a consolidated action, the Michigan Court of Appeals has held in an unpublished decision that the Detroit drainage charge is a valid user fee rather than an unauthorized tax that is subject to the Michigan Constitution’s Headlee Amendment. On remand from the Michigan Supreme Court, the appeals court agreed with the special master and defendants that the drainage charge is a valid user fee rather than a disguised tax and is thus not subject to the Headlee Amendment. In applying the criteria for distinguishing between a user fee and a tax under Bolt v. Lansing, 459 Mich 152, 587 NW2d 264 (1998) the court found the special master correctly concluded that the drainage charge serves a regulatory purpose rather than a revenue-raising purpose. The court also agreed with the special master that the drainage charge is proportionate to the necessary costs of the service. However, the court agreed with the plaintiffs that the drainage charge is not voluntary. However, the court found that although analysis of the third Bolt factor indicates that the drainage charge is effectively compulsory, this did not render the charge a tax because the other criteria indicated the charge was a user fee and not a tax. (Binns, et al. v. City of Detroit, et al., and Detroit Alliance Against the Rain Tax, et al. v. City of Detroit, et al., Mich. Ct. App., Dkt. Nos. 337609; 339176, 11/14/2024 (unpublished).)

Michigan Property Tax—Michigan announces procedural changes for 2025 assessment year.

The Michigan State Tax Commission has issued a release outlining various statutory or procedural changes for the 2025 assessment year. Topics covered include: the inflation rate used in the 2025 capped value formula; federal poverty guidelines used in determining poverty exemptions for 2025 assessments; sales studies; property classification; training requirements stemming from L. 2018, Public Act 660 on property assessing reform; Michigan Tax Tribunal reminders including updated Tax Tribunal Rules; disabled veterans exemption changes; the qualified heavy equipment rental personal property exemption; the small business taxpayer personal property tax exemption; the small business taxpayer personal property tax exemption; reminders about the eligible manufacturing personal property exemption and the essential services assessment; omitted or incorrectly reported property; the authority of July and December boards of review; 2025 State Tax Commission updates class; and the Commission's online education portal and MiSUITE login. (Michigan State Tax Commission Bulletin No. 2024-17, 11/19/2024.)

Michigan Property Tax—Michigan issues release for 2025 Boards of Review.

The Michigan State Tax Commission has issued a release that contains information that Boards of Review need to be aware of for the 2025 assessment year. It includes a discussion of key dates; alternate start dates for the July or December Boards of Review; a discussion of the requirement that all Boards of Review maintain appropriate documentation of their decisions; the inflation rate used in the 2025 capped value formula; July and December Board of Review authority and qualified errors; late applications for certain personal property tax exemptions; poverty exemption changes; property classification; and Board of Review member required training. (Michigan State Tax Commission Bulletin No. 2024-15, 11/19/2024.)

Michigan Property Tax—Michigan adopts multipliers for valuation of free-standing communication towers for 2025.

The State Tax Commission has adopted the table of historical (original cost when the tower was new) cost valuation multipliers to be used in the valuation of free-standing communication towers for the 2025 assessment year. These multipliers have been developed in a manner such that they account for the typical depreciation which is expected for a tower of the indicated age and also account for changes in the cost of the tower and erecting it that have occurred since the time the tower was constructed. On this basis, the multiplier table is intended to predict the current true cash value of a tower of the vintage year in which the tower was constructed. (State Tax Commission Memo: Multipliers for Valuation of Free-Standing Communication Towers, 11/19/2024.)

Michigan Property Tax—Michigan sets interest rate on Tax Tribunal judgments for first half of 2025.

The Michigan State Tax Commission has announced that the interest rate on Michigan Tax Tribunal judgments will be 9.47% for the period January 1, 2025 through June 30, 2025, a decrease from the 9.50% rate for the period July 1, 2024 through December 31, 2024. The rate is adjusted twice a year by the Michigan Department of Treasury based on the "adjusted prime rate" plus 1%. The "adjusted prime rate" is the average predominant prime rate quoted by not fewer than three commercial banks to large businesses during a preceding 6-month period, as determined by the Department. (Michigan State Tax Commission Bulletin No. 2024-16, 11/19/2024.)

Week Of 11.11.2024

Michigan 2025 Income Tax Withholding Tables Issued

The Michigan Department of Treasury issued income tax withholding tables for 2025, which includes a weekly, bi-weekly, semi-monthly, monthly, and per diem payroll period.

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