Treasury is reviewing the recently enacted tax law changes, including the new Marijuana Wholesale Tax. Developing clear and accurate information for tax stakeholders is our top priority. This guidance will be posted to our website in the coming weeks.
Income Tax Rate Change: Withholding Tax
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Should I amend 2023 monthly returns because we withheld at the 4.25% rate?
- No, withholding taxpayers should report and pay the actual tax amounts withheld each tax period.
- If withholding amounts are not adjusted, a reduction in tax liability will be realized in 2024, when individual and fiduciary returns are filed for tax year 2023.
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As an employer or pension administrator, am I required to withhold at the new income tax rate for the remainder of 2023?
- Treasury takes a neutral position on adjusting withholding amounts based on the income tax rate change.
- Businesses may choose to continue withholding at 4.25%, per the published withholding tables, or refigure withholding calculations using the reduced 2023 income tax rate of 4.05%.
- If withholding amounts are not adjusted, employees will receive the adjustment when filing their Michigan income tax return, via a larger refund or less tax owed.
- Treasury takes a neutral position on adjusting withholding amounts based on the income tax rate change.
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As a software provider, am I required to modify our software to adjust the Michigan withholding tax rate from 4.25% to 4.05%?
- Treasury takes a neutral position on adjusting withholding amounts based on the income tax rate change.
- Software providers may choose to continue withholding at 4.25%, per the published withholding tables, or refigure withholding calculations using the reduced 2023 income tax rate of 4.05%.
- If withholding amounts are not adjusted, individuals and fiduciaries will receive the adjustment filing their Michigan income tax return, via a larger refund or less tax owed.
- Treasury takes a neutral position on adjusting withholding amounts based on the income tax rate change.
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As an employer or pension administrator, I decide to continue withholding at the 4.25% rate, but my employee/pensioner wants their withholding adjusted to 4.05% for the remainder of 2023. What do I do?
Employees may submit a revised MI-W4 to their employer (pension recipients may submit a revised MI-W4P to their pension administrator) directing them to adjust withholding amounts at any time.