Michigan Withholding Tax Change

The Governor of Michigan signed House Bill 5194 on October 1, 2007.  This emergency legislation changes the withholding tax rate to 4.35% from 3.90%, effective October 1, 2007.  The Michigan Department of Treasury has posted a Supplemental 2007 Michigan Income Tax Withholding Guide effective October 1, 2007 through December 31, 2007 on their website at http://michigan.gov/treasury.

·         The change is effective beginning October 1, 2007.

·         The withholding tax rate increased to 4.35% from 3.90%.

·         The annual personal exemption amount for this time period remains at $3,400.

Frequently Asked Questions

How do I know if I'm affected?

You may be affected if you currently withhold Michigan income taxes from employees and make withholding tax payments in the State of Michigan or if you currently have a valid Michigan Department of Treasury Account Number.

When will these changes be available in QuickBooks?

The revised withholding tax tables will be available in Payroll Update 20716, scheduled for release via download on mid-October.

What do I need to do?

You will need to download Payroll Update 20716 as soon as it is released so the correct amount of Michigan withholding taxes are calculated and withheld from employees’ paychecks from that point forward.

If you have processed payroll checks in the month of October prior to receiving Payroll Update 20716, you may want to ask your employee(s) if they want to adjust the withholding tax on future payroll checks since withholding tax calculations do not self adjust in QuickBooks.  If the employee(s) chooses to adjust their future withholding tax, they will need to complete a new MI-W4 indicating the additional amount they want deducted from each paycheck.

What if I subscribe to the Disk delivery service?

The update is available as a download release only at this time.  You can always get the payroll update online.  The next Disk delivery release is scheduled for mid-December.  Instructions on how to get a payroll update online are available in QuickBooks Help by clicking the Search tab, then enter getting a payroll update in the search window, and then select Getting a payroll update in the displayed topics listing.