Tax Law Blog

In 2011, Governor Rick Snyder signed into law Public Acts 38 and 39 of 2011 (the “Act”), which make sweeping changes to Michigan’s business and individual tax landscape.

Relevant to individuals, the Act makes many changes, including taxing income from pensions and other types of retirement plans.  This article summarizes the changes applicable to individuals.

In 2011, Public Act 38 was signed into law.  Prior to Public Act 38, public pension benefits were completely deductible, private pensions were deductible up to $45,120 (for a single filer), and all taxpayers were entitled to a personal exemption of $2,500.

Public Act 38 changed that as follows:

Most business owners are familiar with the concept of "piercing the corporate veil" – that legal theory whereby owners and officers may be personally liable for the obligations of a corporation.  However, personal liability may also be imposed in the sales and use tax arena.

In 2011, the Michigan Corporate Income Tax ("CIT") was signed into law.  The CIT repealed the Michigan Business Tax and replaced it with a flat 6% tax on businesses that are taxed as C corporations for federal income tax purposes.