Pass-through tax rules

2026 PTET

Michigan PTET 2026: deadline, rate, who can elect

Michigan (MI), tax year 2026, from the same rules the connector returns. 2025 is below for comparison. Last verified October 24, 2026.

Informational. Not tax advice.

Elective PTET

Yes

The flow-through entity tax continues for 2026. The election rules below are taken from the 2024 PA 216 notice and the 2025 Form 5772 instructions, which are the latest form instructions reviewed. A 2026 form instructions PDF was not used.

Who can elect

An entity treated as an S corporation or a partnership for federal purposes, other than a publicly traded partnership, a disregarded entity, or a financial institution subject to the corporate income tax franchise tax.

Same eligibility as the 2025 Form 5772 instructions. No 2026 change was stated in the notices reviewed.

How the election is made

The entity elects by an electronic payment through Michigan Treasury Online designated for the election year. The election lasts three years, including a re-election.

Any amount, including a nominal amount, works if the payment is made through Michigan Treasury Online and designated for the election year. A payment outside that system is not a valid election.

Election deadline

The last day of the ninth month after the tax year ends. September 30 for a calendar-year 2026 election.

The ninth-month rule applies to years beginning on or after January 1, 2024. An election after the annual return due date makes the entity subject as of the election date, and the tax must be paid in full that day to avoid penalty and interest.

Rate

4.25%, the section 51 individual income tax rate for the 2026 tax year.

The flow-through entity tax uses the MCL 206.51 rate for the same year. Treasury's April 15, 2026 notice states the 2026 individual and fiduciary rate is 4.25%. The formula in MCL 206.51(1)(c) can reduce the rate. It did not for 2026.

Owner relief

Credit, not an exclusion.

The 2025 instructions describe a credit that must be funded by the annual return due date, including extensions. A later payment is creditable only in the year paid. Ultimate claimants are individuals, fiduciaries, and in rare cases corporate income tax taxpayers. Tiered electing entities subtract positive business income from lower electing entities, and the credit passes to the ultimate members.

Estimates

Quarterly if annual liability is reasonably expected to exceed $800.

Calendar-year dates in the 2025 instructions are April 15, June 15, September 15, and January 15. An exception may apply to quarters before the election. The return is due the last day of the third month. A six-month extension does not extend payment.

Sunset or repeal

No sunset date is stated in the 2025 Form 5772 instructions or the Treasury notices reviewed.

The statute was not separately read for a sunset clause. This records only what those documents say.

Still open in the source review

  • The 2026 additional-allowance percentage under IRC 168(k) as of December 31, 2024 is not stated. The notice gives 40 percent for 2025 and says further guidance is forthcoming.
  • A 2026 inflation-adjusted dollar cap under IRC 179 as of December 31, 2024 is not stated. The notice quotes pre-Act limits of $1.25 million and $3.13 million and does not publish a separate 2026 figure.

Sources for this year

2025

Last verified October 24, 2026.

Elective PTET

Yes

Michigan imposes an elective flow-through entity tax under Part 4 of the Income Tax Act, MCL 206.801 and following.

Who can elect

An entity treated as an S corporation or a partnership for federal purposes, other than a publicly traded partnership, a disregarded entity, or a financial institution subject to the corporate income tax franchise tax.

The 2025 Form 5772 instructions limit the tax to entities treated as S corporations or partnerships for federal purposes and exclude publicly traded partnerships, disregarded entities, and financial institutions subject to the franchise tax.

How the election is made

The entity elects by an electronic payment through Michigan Treasury Online designated for the election year. The election lasts three years, including a re-election.

Any amount, including a nominal amount, is a valid election if it is an electronic payment through Michigan Treasury Online designated for that year. A payment outside Michigan Treasury Online is not a valid election. The election runs for three years, and a re-election is also three years. 2024 PA 216 is the amending act described in the Treasury notice.

Election deadline

For a tax year beginning on or after January 1, 2024, the last day of the ninth month after the tax year ends. September 30 for a calendar year.

An election after the annual return due date (March 31 for a calendar year, or the next business day) makes the entity subject to the tax as of the election date. The tax must be paid in full that day to avoid penalty and interest. The entity is presumed to have extended its return to the ninth-month date.

Rate

4.25%, the section 51 individual income tax rate for the same tax year.

The flow-through entity tax is imposed at the same rate levied under MCL 206.51 for that tax year. The individual rate for 2025 is 4.25%. The rate can be reduced under MCL 206.51(1)(c). It was not reduced for 2025.

Owner relief

Credit, not an exclusion.

Credits for the year must be funded by a payment on or before the annual return due date, including extensions. A later payment is creditable only in the year it is paid. Claimants are individuals, fiduciaries, and in rare cases corporate income tax taxpayers. In a tiered structure, an electing upper-tier entity subtracts positive business income from a lower electing entity, and the credit passes to the ultimate members rather than being claimed by the upper-tier entity. There is no loss carryover at the flow-through entity level.

Estimates

Quarterly if annual liability is reasonably expected to exceed $800.

Calendar-year dates are April 15, June 15, September 15, and January 15. An exception may apply to quarters before the election. The return is due the last day of the third month (March 31 for a calendar year). A six-month extension does not extend the time to pay.

Sunset or repeal

No sunset date is stated in the 2025 Form 5772 instructions or the Treasury notices reviewed.

The statute text was not separately read for a sunset clause. This is a statement about the documents reviewed on October 24, 2026, not a claim that every section of the act was searched.

Sources for this year

Bonus-depreciation conformity is on its own page.