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Notice: Instructions for Electing Into and Paying the Flow-Through Entity Tax

Date: December 22, 2021

As signed into law by Governor Whitmer on December 20, 2021, PA 135 of 2021 amends the Income Tax Act to create a flow-through entity tax in Michigan.  Generally, the flow-through entity tax allows certain flow-through entities to elect to file a return and pay tax on income in Michigan and allows members or owners of that entity to claim a refundable tax credit equal to the tax previously paid on that income. As enacted, this tax is retroactive to tax years beginning on or after January 1, 2021, for flow-through entities that make a valid election.  

All payments under the flow-through entity tax are required to be submitted through Michigan Treasury Online (MTO), located at A payment submitted timely through MTO will be deemed to be a valid election for the tax year specified on that payment. Therefore, flow-through entities that wish to make an election or payment may do so simultaneously through an MTO electronic payment. Payments submitted outside of MTO will neither be accepted[1] nor be regarded as a valid election into the flow-through entity tax.[2]  In addition, other payments made by flow-through entities (e.g., for composite return estimated payments) or members (e.g., for MI-1040 estimated payments) will not be applied toward the flow-through entity tax and will not constitute an election into the tax.

For 2021, while the initial election into the flow-through entity tax and any payment required are due on certain dates in 2022, many flow-through entities may wish to make an election or payment on or before December 31, 2021. MTO website functionality is currently being established. A Fast Pay option under Guest Services will be available on December 29, 2021.  Additional information will be visible to logged-in customers on the MTO website once payments can be made. 

The Department will be issuing additional and more detailed guidance about the flow-through entity tax and its impact on members.  This guidance is expected to be published in early January 2022 and will be posted to the Department's website.

For further questions, please contact the Business Taxes Division at 517-636-6925 and follow the prompts for Corporate Income Tax/Flow-Through Entity.


[1] MCL 206.841(6).

[2] MCL 206.813.