Beginning in January 1, 2012, the Michigan Business Tax is being discontinued and will be replaced by a corporate tax. S corporations and other passthru entities are not subject to the corporate level tax. Like a normal S corporation you would be subject to tax at the shareholder level. The individual rate in Michigan is currently 4.35% but is to drop to 4.25% beginning 2013. If you have more than $200,000 of apportioned business income into Michigan, you will be required to remit withholding tax.