Michigan is an easy state for sales tax and a fiddly one for payroll. Most Michigan bookkeeping mistakes come from the second half: city income tax that was never withheld, an unemployment account nobody opened, or an annual statement nobody knew existed. This guide starts with sales tax filing (the rate, how often you file, the due dates and the two forms), then covers use tax, payroll, the flow-through election and the LLC annual statement, and ends with the dates that catch people out.
Michigan sales tax: one 6% rate, no local add-ons
Michigan charges 6% sales tax on taxable retail sales of goods. Residential electricity, natural gas and home heating fuels are taxed at 4%. State law does not let cities or counties add their own sales tax, so the rate is the same in every town and you never need a rate table by address.
You register with Treasury for a sales tax license, which runs from January 1 to December 31 and renews automatically each year unless you cancel it. There is no application fee. Sellers outside Michigan must register once they pass the remote seller threshold: more than $100,000 of sales, or 200 or more separate transactions, with Michigan customers in the previous calendar year.
In the books, sales tax you collect is a liability, not revenue. If your point-of-sale or Shopify deposits land as one number, split the tax out before you record the sale, or revenue is overstated and the liability account is empty when the return is due. It is the same method we use for recording Shopify sales in QuickBooks. If you would rather hand the returns over, sales tax filing is part of our tax preparation service.
Sales tax filing frequency and due dates
Treasury, not you, decides how often you file. At registration it sets your frequency from the estimated monthly tax on your application, then reviews it each year against what you actually owed and tells you in writing if it changes. Sales, use and withholding taxes share one combined return, so all three follow the same schedule.
| Frequency | Each return covers | Due |
|---|---|---|
| Monthly | One calendar month | The 20th of the next month |
| Quarterly | January to March, April to June, July to September, October to December | April 20, July 20, October 20, January 20 |
| Annual | The calendar year | February 28 of the next year |
| Accelerated | One calendar month, paid partly in advance | A prepayment by the 20th of the current month, the rest by the 20th of the next |
When a due date falls on a weekend or a state holiday, the return and payment are due the next business day. Businesses with $720,000 or more of sales tax or use tax liability in the previous calendar year pay on the accelerated schedule.
Two rules surprise people. First, file on the schedule Treasury assigned, not more often: extra returns throw the account out of balance and lead to notices. You can pay as often as you like; only the filing schedule is fixed. Second, a registered business files every return even when no tax is due. A quarter with no taxable sales is still a quarter with a return.
| Due | Return |
|---|---|
| Tue, Oct 20, 2026 | September monthly return; third-quarter return |
| Fri, Nov 20, 2026 | October monthly return |
| Mon, Dec 21, 2026 | November monthly return (December 20 is a Sunday) |
| Wed, Jan 20, 2027 | December monthly return; fourth-quarter return |
| Mon, Mar 1, 2027 | 2026 annual return, Form 5081, for every filer (February 28 is a Sunday) |
The next due dates, checked against Treasury’s schedule and weekend rule on October 2, 2026.
Forms 5080 and 5081
Form 5080 is the Sales, Use and Withholding Taxes Monthly/Quarterly Return. Form 5081 is the annual return for the same three taxes. Every sales, use and withholding filer submits the annual return, whatever its frequency, because the annual return reconciles, balances and closes the tax year. It does not replace the monthly or quarterly returns: filing only the annual return leaves the missing periods unfiled.
- Gross sales means all sales, taxable and non-taxable. Treasury’s Form 5095 worksheet helps you split them.
- Mistakes are fixed with an amended return: Form 5092 for a monthly or quarterly period, Form 5082 for the annual return. Fill in only the tax you are correcting.
- Returns and payments can be filed online through Michigan Treasury Online (MTO).
Use tax on out-of-state purchases
Use tax is the companion to sales tax. You owe 6% Michigan use tax on taxable items you bring into Michigan or buy online, by mail or by phone from sellers that did not charge Michigan tax. Equipment and software bought from out-of-state vendors are the usual culprits. Treasury gives credit for sales tax paid to another state, and use tax also applies to some services, such as telecommunications and hotel stays.
Use tax goes on the same combined return. In the books, record it with the purchase: the item at its full cost including the tax, and the tax as a liability until you pay it with the return. It works the other way round too. If you sell into other states, their remote seller rules may apply to you, just as Michigan’s apply to sellers here; our page for online sellers covers multi-state sales tax.
City income tax: the Michigan payroll trap
Michigan has 24 cities with their own income tax, and employers withhold it from wages. The rates are low (most cities charge 1% to residents and 0.5% to non-residents; Detroit charges 2.4% and 1.2%), but each city has its own registration, deposits and annual reconciliation, separate from state withholding. What you withhold depends on where each employee lives and where they work, so a new hire or a move can change it.
Which cities tax wages, the current rates and how remote staff are treated are all in our guide to Michigan city income tax rates for employers.
State withholding and unemployment insurance
Michigan’s income tax rate for 2026 is a flat 4.25%. Employers withhold it from wages and report it on the same combined sales, use and withholding return described above, on the same schedule.
Unemployment insurance is separate and run by the Unemployment Insurance Agency (UIA). Employers file a quarterly wage report by January 25, April 25, July 25 and October 25 (the next business day when the 25th falls on a weekend or holiday), even for a quarter with no wages. For 2026, contributions are charged on the first $9,000 of each employee’s wages for employers in good standing, and on the first $9,500 for employers with missing reports or an unpaid balance of $25 or more. New employers pay 2.7% for their first two years; new construction employers pay the average construction rate instead, which is higher.
At year-end come W-2s for employees and 1099-NEC forms for contractors paid $2,000 or more in 2026 (the threshold was $600 through 2025), both due February 1, 2027. The details are in our guide to the 1099 threshold for 2026.
Entity taxes: the flow-through election
C corporations pay Michigan’s 6% corporate income tax. Partnerships, S corporations and LLCs taxed as either can choose to pay Michigan’s flow-through entity tax instead of leaving the tax with their owners. The rate matches the individual rate, 4.25% for 2026, and owners can claim a refundable Michigan credit for the tax the entity paid.
The appeal is federal: a state tax paid by the business is generally deductible by the business, which can help owners whose own state and local tax deduction is capped. Whether it saves money depends on your income and that year’s federal rules, so decide it with your tax preparer. If you do elect:
- The election is made only by an electronic payment through MTO, designated for the first tax year.
- It covers that year and the next two, and it cannot be revoked.
- Estimated payments are due when the year’s tax is expected to exceed $800: April 15, June 15, September 15 and January 15 for calendar-year filers.
- The annual return, Form 5772, is due on the last day of the third month after the year ends (March 31 for calendar-year filers), and is filed through MTO only.
The LARA annual statement
Every Michigan LLC files an annual statement with the Department of Licensing and Regulatory Affairs (LARA) by February 15 each year, starting the year after it is formed; an LLC formed after September 30 skips the first February 15. The fee is $25, and the statement can be filed online.
It is easy to forget because it has nothing to do with tax. If statements go unfiled, the LLC is no longer in good standing after two years and its name becomes available to other businesses. Getting it back means filing every missing statement plus a restoration fee.
The dates that catch people out
- The 20th
- Sales, use and withholding returns (Form 5080) on the monthly or quarterly schedule Treasury assigned you.
- The 25th after each quarter
- UIA quarterly wage reports. The next is due Monday, October 26, 2026, because the 25th is a Sunday.
- January 15, 2027
- The fourth flow-through estimate, if your business made the election.
- February 1, 2027
- W-2s and 1099-NEC forms for 2026 (federal deadlines).
- February 15, 2027
- The LARA annual statement for every Michigan LLC.
- March 1, 2027
- The 2026 annual sales, use and withholding return (Form 5081), for every filer.
- March 31, 2027
- The flow-through entity annual return (Form 5772) for calendar-year electing entities.
Good Michigan books make every one of these a report rather than a reconstruction: accounts reconciled monthly, sales tax split from revenue as it is recorded, payroll liabilities tracked by agency (state, city and UIA), contractor payments tagged for 1099s all year, and one calendar with these dates on it, owned by someone.
Common questions
Do monthly filers also file an annual Michigan sales tax return?
Yes. Every sales, use and withholding filer submits the annual return, Form 5081, whatever its filing frequency, because it reconciles and closes the year. It is due February 28; for the 2026 tax year that moves to March 1, 2027, since February 28 falls on a Sunday.
Is there a local sales tax in Michigan?
No. Michigan does not allow cities or counties to impose a sales or use tax, so the 6% state rate applies everywhere in the state (4% on residential utilities and home heating fuels).
Do I have to file a Michigan sales tax return if I made no sales?
Yes. A registered business must file every return on its schedule, even when no tax is due. Filing the zero return keeps the account in balance and avoids notices.
Can I change my Michigan sales tax filing frequency?
Treasury sets it. It assigns a frequency at registration, reviews it each year based on your prior-year tax and tells you in writing if it changes. File on the assigned schedule; you can still pay more often if you want to.
Do I owe Michigan use tax on things I buy online?
Yes, when the seller did not charge Michigan sales tax on a taxable item. You report 6% use tax on your sales, use and withholding return, with credit for any sales tax you paid to another state.
When is the Michigan annual LLC statement due?
By February 15 each year, filed with LARA, starting the year after the LLC is formed. The fee is $25. Leave statements unfiled and the LLC loses its good standing after two years.
Does a Michigan small business need to register for unemployment insurance?
Yes, once it has employees. Employers register with the Unemployment Insurance Agency, file quarterly wage reports and, for 2026, pay contributions on the first $9,000 of each employee’s wages if they are in good standing ($9,500 if not).
Not sure your Michigan filings tie back to your books? A free books review tells you. Add us as your accountant, and within about 48 hours you get a written list of what is misclassified or unreconciled. It is free, yours to keep, and nothing in your books changes.