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Notice: 4.25% Tax Rate for Flow-Through Entity Tax Years Beginning in 2024

Notice: 4.25% Tax Rate for Flow-Through Entity Tax Years Beginning in 2024


Date: March 20, 2024

The Michigan Flow-through Entity Tax (FTE tax) is levied under Part 4 of the Income Tax Act, MCL 206.801 et seq., and is imposed, “at the same rate levied and imposed under section 51 for that same tax year.”  See MCL 206.51.  Treasury previously issued notices announcing that the rate in effect under section 51 for the 2024 tax year is 4.25%.; therefore, the FTE rate in effect for 2024, including for fiscal year filers with tax years beginning in 2024, is 4.25%. 

For the previous year, fiscal filers with tax years beginning in 2023 and ending in 2024 paid FTE tax at 4.05%. Members that claim a credit from these fiscal filers on their 2024 Michigan individual income tax return (Form MI-1040 or MI-1041) may be underpaid if relying solely on the FTE tax credit for the portion of their liability attributable to the flow-through income, which is taxed at 4.25% that year.  Affected members should evaluate the impact of any deficiency and adjust their estimated payments if necessary. Any overpayment claimed as a credit-forward on an individual’s 2023 annual return will be credited as that taxpayer’s first 2024 quarterly estimated payment. This rate differential affects only direct and indirect members of 2023-2024 fiscal year electing flow-through entities; members of calendar year filers should not be affected.

Treasury will update forms, instructions, and guidance as necessary to reflect the change to the annual FTE tax rate for tax years beginning in 2024. These changes, as well as any other future guidance, will be available on Treasury’s website at