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Notice: Court of Appeals Concludes Reduction to Income Tax Rate for Tax Year 2023 Was Temporary

Issued: March 7, 2024

In Associated Builders and Contractors of Michigan v Eubanks, a group of individual taxpayers and interested parties challenged the implementation of an Attorney General opinion that held the 4.05% tax rate as determined under Section 51(1)(c) of the Income Tax Act, MCL 206.51(1)(c), was temporary and effective for the 2023 tax year only (OAG Opinion No. 7320). On December 21, 2023, the Michigan Court of Claims issued an opinion upholding the Attorney General’s interpretation of Section 51(1)(c). That interpretation was recently affirmed by the Michigan Court of Appeals in a published opinion issued on March 7, 2024, which held the income tax rate under Section 51 is 4.25% each tax year that a rate adjustment under Section 51(1)(c) does not occur. Accordingly, the 4.25% tax rate applies to tax years that begin in 2024 for individuals, fiduciaries, and flow-through entities paying the Michigan Flow-Through Entity Tax.

Further updates and developments related to this case will be posted to Treasury’s website at