Since profits are only part of the tax base, there are no dramatic fluctuations with changes in profitability, which allows for better planning of projected tax costs. There is a generous capital acquisition deduction. Purchase of real property in Michigan is fully deductible in the year of purchase. The value of these deductions can be carried forward for up to 10 years. Deductions and credits significantly reduce the tax burden, including that of small and low-profit businesses.
More businesses are sure to be exempt with the higher filing threshold.
Eligible small businesses may pay an alternative 2 percent tax on adjusted business income. Localities levy taxes for local governmental operations. The taxable value of property is 50 percent of the current market value. Both real and personal property are subject to taxation. Exemptions from property taxes include inventory, special tools, dies, jigs and most pollution abatement equipment.