Preliminary information for the Wholesale Marihuana Tax is now available.
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Issued: January 28, 2026
On July 4, 2025, Public Law 119-21, also known as the One Big Beautiful Bill Act (OB3), was signed into law. The OB3 reinstated, expanded, or added several business deductions, resulting in reduced federal income tax for many C corporations operating in Michigan. On October 7, 2025, Michigan Public Act (PA) 24 was signed into law and decoupled from various OB3 provisions. Because of the difficulty in calculating quarterly estimates following these significant changes in law, Treasury will provide limited relief from penalty and interest related to the underpayment of quarterly estimated payments. This Notice describes the conditions under which relief will be granted and the steps taxpayers must take to seek relief.
Under Part 2 of the Michigan Income Tax Act, CIT taxpayers are required to pay quarterly estimated tax payments and file quarterly estimated returns if the taxpayer reasonably expects liability for the tax year to exceed $800. MCL 206.681(1). Generally, each estimated payment must be for the estimated tax for the quarter or 25% of the estimated annual liability. MCL 206.681(3). Penalty for failure to timely file or pay estimated payments and interest are imposed under MCL 205.24. Relief is available if a taxpayer shows that the underpayment is due to reasonable cause and not willful neglect. See MCL 205.24(3) and Revenue Administrative Bulletin (RAB) 2025-15.
Due to the difficulty in calculating accurate estimates created by multiple significant changes in law enacted throughout 2025, it has been determined that reasonable cause exists to allow for a waiver of penalty and interest related to the underpayment of certain quarterly estimates, subject to the following conditions:
This relief must be requested in writing, subject to the specific procedures outlined in this notice. For eligible quarters that are underpaid, taxpayers will receive, depending on the circumstances, either a “Notice of Additional Tax Due” or “Notice of Refund Adjustment” imposing underpayment penalty and interest. To request relief, the taxpayer must send a written waiver request following the direction provided within that notice. That request must specifically refer to this notice and the amount of the tax base adjustment reported on Form 4891, line 13 (Miscellaneous). Because it is presumed that PA 24 impacted the calculation of accurate CIT estimates for the quarter, taxpayers do not need to include any additional facts or explanation to further demonstrate eligibility for this relief. The relief will be applied by Treasury upon review of that request. Taxpayers should not submit requests for relief prior to receiving a notice from Treasury.
This relief is not applicable to any other deadlines. The annual return due date remains the last day of the 4th month after the tax year, which is April 30, 2026, for calendar year filers. Penalty and interest will accrue from the annual return due date if the annual tax liability is not paid by that due date.
This relief applies only to the income tax under the CIT and does not apply to the premiums or franchise tax. This relief is not applicable to quarterly underpayments of other taxpayers whose estimates may have been impacted by PA 24, such as individuals reporting business income from flow-through entities or flow-through entities filing the Michigan Flow-Through Entity tax. However, these taxpayers always have the option to request, in writing, a waiver of penalty for reasonable cause. See RAB 2025-15. Treasury will evaluate each request under the taxpayer’s particular facts and circumstances.