Michigan lesson 5 of 6
Michigan LLC taxes, licences and permits
Michigan has no LLC franchise tax. Members of a pass-through LLC pay the state's flat individual income tax on their share of profit, and some cities, notably Detroit, add their own local income tax.
How members are taxed
A Michigan LLC taxed as a partnership or sole proprietorship for federal purposes passes income through to its members, who pay Michigan's flat individual income tax on their share. The rate for the 2025 tax year is 4.25%, the same as it has been since a temporary reduction to 4.05% for 2023 reverted the following year. Confirm the current year's rate on the Department of Treasury's tax rate notice before filing, since the rate is subject to an annual statutory calculation.
An LLC that elects C corporation tax treatment instead owes Michigan's 6% Corporate Income Tax on its business income.
Sales tax, withholding and local taxes
If you sell taxable goods, register with Treasury for a sales tax licence before you start selling. If you have employees, register for withholding tax at the same time. Some Michigan cities, including Detroit, levy their own city income tax, which applies to income earned in the city regardless of where the LLC's members live.
Michigan has no general statewide business licence. Licensing requirements depend on your industry and, in some cases, your city or county.
Key takeaways
- The flat individual income tax rate is 4.25% for the 2025 tax year.
- There is no LLC franchise tax; a C-Corp election instead pays the 6% Corporate Income Tax.
- Detroit and some other cities levy their own city income tax on top of the state rate.
Frequently asked questions
Does Michigan have a franchise tax on LLCs?
No. Michigan repealed its Single Business Tax in 2008 and does not levy a franchise tax on LLCs. Only a C-Corp election pays the 6% Corporate Income Tax.
Is there a statewide business licence in Michigan?
No. Check with your city or county and with any state board that regulates your specific industry.
Official sources
Or let us file your Michigan LLC for you
Everything above is yours to use for free. If you would rather hand it over, we prepare and file the Articles of Organization (Form CSCL/CD-700), act as your registered agent, and track your ongoing deadlines.
Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team