Property Management Taxes In Michigan

Updated August 7, 2026

13 min read

This guide covers the taxes that actually apply to a property management company operating in Michigan, and to the rental income it handles on behalf of owners. Every figure below is tied to the statute, agency rule, or published guidance that sets it, so you can confirm a rate or deadline before acting on it.

State Income Tax On Rental And Management Income

Michigan levies a flat individual income tax of 4.25 percent on taxable income, including rental income, which flows from federal adjusted gross income. MCL 206.51 contains a revenue trigger that can temporarily reduce the rate for a single year, which happened only once, for 2023. C corporations pay a separate 6 percent Corporate Income Tax. Michigan cities can also levy their own income taxes, which reach nonresident rental income from property located in the city.

The Michigan individual income tax rate for the 2026 tax year is 4.25 percent. The state treasurer and the House and Senate Fiscal Agency directors determined that general fund growth did not exceed inflation, so no rate adjustment was required. (MCL 206.51)
Michigan Treasury states that the 4.05 percent rate was in effect for the 2023 tax year only, and that on January 1, 2024 the income tax rate in Michigan returned to 4.25 percent. A 2024 Court of Appeals decision determined that any reduction triggered by the 2015 law is temporary and lasts one year. (MCL 206.51(1)(c))
The Michigan Corporate Income Tax imposes 6 percent on C corporations and entities taxed as corporations federally. Taxpayers with less than $350,000 in allocated or apportioned gross receipts, or annual liability of $100 or less, are not required to file or pay. A small business alternative credit offers an alternate rate of 1.8 percent of adjusted business income. (MCL 206.623)
Michigan cities may levy a city income tax under the City Income Tax Act. The uniform ordinance rate is 1 percent on corporations and resident individuals and one half percent on nonresident individuals, and the nonresident rate may not exceed half the resident rate. A city with population over 600,000, meaning Detroit, may levy up to 2.40 percent on resident individuals, 1.20 percent on nonresident individuals, and 2 percent on corporations. (MCL 141.503(2); MCL 141.611)
City income tax applies to a nonresident individual on the net profits from rentals of real and tangible personal property located in the city. This means an out of city owner of a rental property in Detroit or another taxing city owes city income tax on that rental income. (MCL 141.613(c))

Sales Tax On Rent: What Applies And What Does Not

Michigan does not tax long-term residential rent. Sales tax reaches retail sales of tangible personal property, and use tax reaches a narrow enumerated list of services. Rooms and lodging are subject to the 6 percent use tax, but the statute expressly excludes accommodations rented for a continuous period of more than one month. There is no local sales or use tax anywhere in Michigan.

Michigan imposes a 6 percent sales tax on retail sales of tangible personal property to the final consumer, and a companion 6 percent use tax. Michigan does not allow city or local units to impose sales tax or use tax. (MCL 205.52; MCL 205.93)
Use tax applies to rooms or lodging furnished by hotelkeepers, motel operators, and other persons furnishing accommodations available to the public on a commercial basis, except rooms and lodging rented for a continuous period of more than 1 month. The definition of hotel or motel expressly excludes accommodations rented for a continuous period of more than 1 month. (MCL 205.93a(1)(b))
Long-term residential rent is not a taxable service under the Use Tax Act and is not a retail sale of tangible personal property under the General Sales Tax Act. Property management fees are likewise not enumerated as a taxable service. (MCL 205.93a; MCL 205.52)
Sales and use tax returns are due monthly on the 20th of the following month, quarterly on the 20th of the month after the quarter ends, and all filers must submit an annual return by February 28 regardless of assigned filing frequency. (MCL 205.56)

Property Tax

Michigan property tax is levied in mills against taxable value. Assessed value is capped at 50 percent of true cash value and equalized into state equalized value, but taxable value is separately capped at the lesser of the inflation rate or 5 percent per year until the property is transferred. The 6 mill State Education Tax applies statewide. Rental property does not qualify for the Principal Residence Exemption and therefore also pays up to 18 mills of local school operating tax.

The Michigan Constitution requires property to be assessed uniformly at a rate not to exceed 50 percent of true cash value. True cash value is the usual selling price the property would bring on the local market. The assessor determines assessed value based on the property's condition on December 31 of the previous year, and the tax day for 2026 assessments was December 31, 2025. (Mich. Const. art. IX sec. 3; MCL 211.2)
Taxable value, not assessed value, is used to calculate property taxes. For each continued year of ownership, taxable value is the lesser of the previous year's taxable value minus losses, adjusted for inflation or 5 percent whichever is less, plus new improvements, or that year's state equalized value. The inflation rate used for 2026 taxable values is 2.7 percent. A transfer of ownership uncaps the value the following year. (MCL 211.27a(2) and (3))
Property tax is determined by multiplying the total local millage rate by the taxable value. A mill equals $1 of tax per $1,000 of taxable value. For example, a 32 mill rate on $100,000 of taxable value produces $3,200 of tax. (MCL 211.34d)
The 6 mill State Education Tax is collected in the summer and is the only property tax collected by local units that is not retained locally. County allocated millages are collected in the summer and county extra voted millages in the winter. Townships traditionally collect in the winter while most cities collect in the summer, so the two installment pattern is a convention rather than a universal rule. (State Education Tax Act, 1993 PA 331, MCL 211.901 et seq.)
A local unit may add a property tax administration fee of not more than 1 percent of the total tax bill per parcel, and after taxes are returned delinquent the county adds a 4 percent county property tax administration fee plus interest at 1 percent per month. (MCL 211.44(3); MCL 211.78a)
The Principal Residence Exemption exempts an owner occupied principal residence from up to 18 mills of local school operating tax. It does not apply to rental or investment property, which is why non-homestead millage on rental property is higher. (MCL 211.7cc)

Withholding And Employer Taxes

Michigan employers withhold state income tax at the same 4.25 percent rate that applies to individuals, and file through Michigan Treasury Online. Employers in a city that levies an income tax must also register for and withhold city income tax. Sales, use, and withholding taxes share a common filing calendar with an annual return due February 28.

Michigan withholding tax is imposed at the same rate as the individual income tax, which is 4.25 percent. Withholding returns and payments are due monthly on the 20th of the following month, quarterly on the 20th after the quarter ends, and all businesses must file an annual return by February 28. (MCL 206.51; MCL 206.703)
Accelerated electronic funds transfer filers must remit withholding on or before the same day as the federal payment regardless of the amount due. (MCL 206.703)
Employers in cities that levy a city income tax must withhold that tax as well. The Michigan Department of Treasury administers City of Detroit employer withholding, corporate, estate and trust, partnership, and individual income tax returns, and will begin administering City of Flint returns effective January 1, 2027 for the 2026 and later tax years. (City Income Tax Act, 1964 PA 284, MCL 141.501 et seq.)

Federal Obligations

Federal rules drive most of a Michigan property manager's reporting. Rental income and expenses go on Schedule E, or Schedule C where substantial services are provided. Residential rental buildings depreciate over 27.5 years. Michigan starts from federal adjusted gross income, so federal depreciation including bonus depreciation flows into the Michigan return without a state addback. The information return threshold rose from $600 to $2,000 for payments made after December 31, 2025.

The information return reporting threshold under IRC Section 6041(a) increased from $600 to $2,000 for payments made after December 31, 2025, and is indexed for inflation for payments made after December 31, 2026. Rents of $2,000 or more are reported in Box 1 of Form 1099-MISC. (IRC sec. 6041(a) and sec. 6041(h), as amended by Pub. L. 119-21 sec. 70433)
For tax year 2025 the IRS announced no changes to Form W-2, existing Forms 1099, or payroll return forms, so the prior threshold governs 2025 payments and the new $2,000 threshold first applies to calendar year 2026 payments. (IRS Publication 1099 (2026), General Instructions for Certain Information Returns)
Rental real estate income and expenses are reported on Schedule E (Form 1040), or on Schedule C when substantial services primarily for the tenant's convenience are provided. Advance rent is income in the year received. Security deposits are not income if they must be returned, but become income when kept for damages or lease violations, and a deposit held as final month's rent is treated as advance rent when received. (IRS Topic No. 414; IRS Publication 527)
Residential rental property is depreciated over 27.5 years under the federal modified accelerated cost recovery system. (IRC sec. 168)

Filing Deadlines

Michigan individual returns follow the federal April 15 date. Personal property statements are due to the local assessor by February 20. Summer property taxes are due September 14 and winter taxes are payable through mid February, subject to charter variations. Corporate Income Tax is quarterly with an annual return due April 30, and sales, use, and withholding annual returns are due February 28.

The personal property statement must be completed and delivered to the assessor by February 20 of each year, or the next business day if February 20 falls on a weekend or legal holiday. Postmark on or before the deadline is timely. Late submissions may be filed directly with the March Board of Review before final adjournment. (MCL 211.19(2))
Summer taxes are due September 14 unless the property is located in a city with a separate charter due date. Interest of 1 percent per month accrues on late payment of the State Education Tax and county allocated millage. For the 2026 cycle, February 17, 2026 was the last day to pay 2025 property taxes without a 3 percent late penalty charge, and March 1 is when unpaid real property taxes are turned over to the county treasurer as delinquent. (MCL 211.44a; MCL 211.44(3); MCL 211.78a)
Appeals of 2026 assessments to the Michigan Tax Tribunal must be filed by July 31, 2026 for residential or agricultural property and by May 31, 2026 for other property. Residential and agricultural owners must first protest to the March Board of Review. (MCL 205.735a)
Corporate Income Tax returns and estimated payments are quarterly, due April 15, July 15, October 15, and January 15 for calendar year filers, with the annual return due April 30 of the following year. (MCL 206.681; MCL 206.685)

Registration And Recordkeeping

Managing or renting real estate for others for a fee makes a firm a real estate broker under Michigan's Occupational Code, so licensure is required. On the tax side a Michigan property manager registers with Treasury for withholding and any sales or use tax obligations, files through Michigan Treasury Online, and reports business personal property to each local assessor by February 20 or claims the small business exemption instead.

A real estate broker under Michigan's Occupational Code includes a person or business entity that, with intent to collect a fee, leases or offers or rents or offers for rent real estate for others as a whole or partial vocation, or that engages in property management as a whole or partial vocation. A real estate salesperson may engage in property management when employed by a licensed real estate broker. (MCL 339.2501(u) and (v))
A business whose commercial or industrial personal property in a local tax collecting unit has a combined true cash value of less than $180,000 may claim the small business taxpayer exemption by filing Form 5076 with the city or township by February 20. The limit rose from $80,000 to $180,000 beginning in 2023. Late forms may be filed with the March Board of Review before it closes. (MCL 211.9o)
Michigan sales tax licenses are valid January 1 through December 31, and entities must register for sales tax with Treasury to receive a license. Registration, filing, and payment are handled through Michigan Treasury Online. (MCL 205.53)
The assessor's annual notice about the personal property statement must inform the recipient of the exemptions available under MCL 211.9m, 211.9n, and 211.9o and must be sent by January 10 each year. (MCL 211.19(2)(a) to (c))

Recent Changes Worth Tracking

The combined true cash value limit for eligible personal property under the small business taxpayer exemption increased from $80,000 to $180,000 beginning in 2023. (MCL 211.9o)
A Research and Development tax credit is available to eligible Corporate Income Tax filers and eligible withholding tax filers for tax years beginning on or after January 1, 2025. (MCL 206.716)
The inflation rate multiplier used to compute 2026 taxable values is 2.7 percent, so taxable value on unsold property can rise no more than 2.7 percent for 2026 apart from additions. (MCL 211.27a(2))

Tax is one half of Michigan compliance. See our guide to Michigan property management laws and regulations for licensing, trust account, and disclosure rules.

Keeping This Straight

Tax rates and thresholds move more often than most operators expect, and the figures circulating in older articles go stale quickly. Check any rate against its citation before you quote it to an owner, and re-check them at the start of each tax year.

This guide is a starting point for professional managers, not tax or legal advice. For a specific filing, work with a CPA familiar with Michigan rental property, and confirm current figures with the Michigan Department of Treasury or the IRS.