The income tax rate in Michigan is a flat rate at 4.35%. There are additional local taxes imposed in some cities.
The Michigan State Sales Tax was brought up from 4% to 6% in 1994. There is also a 6% Use Tax in Michigan, which applies to any item that is brought into Michigan, but not bought there, and where taxes were not paid to the state the item was bought in. This tax is paid when filing a resident’s Michigan Income Tax Return.
In September, 2007, a service tax was approved and put into effect on the following December, which allowed certain services to have a tax. Interestingly, the tax was repealed on the first day it went into effect.
Though most states have local sales taxes in various counties and cities, there aren’t any in Michigan. However, there is a tax placed of the total amount of online orders, meaning shipping charges are also taxed. Prescription drugs, periodicals and food are not taxed in Michigan. There is, however, a tax for restaurants which is placed on the service, not the food.
Though it isn’t really a tax, Michigan does have the highest bottle deposit ($0.10) for carbonated beverages, which was originally instituted to encourage recycling.
There used to be a Single Business Tax program, but it has recently been recently been replaced by the Michigan Business Tax (MBT).
Exemption for Qualified Disabled Veterans
If you’re a taxpayer with a disability connected to your time in the service, or have a dependent with such a disability, you may be eligible to claim a $300 exemption on your 2011 tax return.
Renewable Energy Surcharge Credit
This credit is based on 20% of your renewable energy monthly surcharges that may appear on your residential itemized electric bill. Taxpayers may claim the credit only if the surcharge appears on their monthly electric bill.
You are required to file your tax return by April 15th unless you file an extension to allow for more time. An extension allows you more time you get your paperwork together to file your return. It does not give you more time to pay. If you pay late then you could face interest and penalties. You can file your tax return either online by e-filing your return or by mailing your return in.