Lapeer: (810) 664-4470

Rochester: (248) 601-9500

Rochester: (248) 601-9500

Lapeer: (810) 664-4470

Mattina, Kent & Gibbons, P.C.

Certified Public Accountants

On Monday, December 20, 2021, Michigan Governor Gretchen Whitmer signed a SALT Cap Workaround into law which allows flow-through entities taxed as partnerships or S-corporations to elect to calculate and pay Michigan income taxes at the entity level.

When the entity elects to pay the tax, it becomes an entity level business expense that is deductible from business income. This reduces the federal taxable income that flows to the owner’s return, effectively getting around the state and local tax cap on itemized deductions. The shareholders/members of the flow-through entity can then claim a credit for their share of the Michigan taxes paid on their personal Michigan return. Any excess tax is refundable to the taxpayer.

To fully reap the tax benefits for 2021 the tax payment must be made by December 31st through MTO (Michigan Treasury Online) and the payment must be the entire anticipated tax due for Michigan tax, it will not take into account any withholding or estimates already paid in.

Please see the attached document for more details, including how to make a payment or contact your team at MKG to review your options.

Michigan HB 5376