TREASURY - Michigan Income Tax Filing Requirements of Flow 2025

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You must file a Michigan return if you file a federal return or your income exceeds your Michigan exemption allowance. A return must be filed even if you do not owe Michigan tax.
As many taxpayers are aware, the state of Michigan enacted the Flow-Through Entity (FTE) Tax effective for the tax years beginning January 1, 2021, allowing entities classified as an S corporation or a partnership, for federal tax purposes, to elect to pay Michigan income tax at the entity level.
Part 1 of this form reports information about direct members of the filer that are Corporation Income Tax taxpayers. Part 2 of this form reports information about direct or, if known, indirect members of the filer and are Individual Income Tax taxpayers or other flow-through entities.
Notice: 4.25% Tax Rate for Flow-Through Entity Tax Years Beginning in 2024. The Michigan Flow-through Entity Tax (FTE tax) is levied under Part 4 of the Income Tax Act, MCL 206.801 et seq., and is imposed, at the same rate levied and imposed under section 51 for that same tax year. See MCL 206.51.
State Taxes The tax system in Michigan offers several advantages to the senior citizen. In addition to their regular personal deduction of $2,900, persons 65 years or older are entitled to an additional exemption of $1,900 on their state income tax returns.
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A flow-through entity is a business in which income is passed straight to its shareholders, owners, or investors. As a result, only the individuals, not the business, are taxed on the revenue thereby avoiding double taxation.
Under the new rules, FTEs must now report to members their share of tax imposed and paid on or before the due date for filing the FTE tax return, including extensions. Members may now claim credits for amounts the FTE paid through the extended due date on their income tax returns for the applicable tax year.

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