My company is located out-of-state with no nexus in Michigan. We have employees who are Michigan residents working in Michigan and out-of-state. Which state's withholding tax would apply?
Employers have the option to voluntarily register with the Michigan Department of Treasury to withhold Michigan income tax or the employee must make estimated income tax payments directly to Michigan.
Michigan has a reciprocal agreement with Wisconsin, Indiana, Kentucky, Illinois, Ohio and Minnesota. Employers in these states should not withhold their state's income tax from Michigan residents who work in their states.