SB 1127 Summary

• Allows employers located in Michigan with employees who are residents of a city imposing income tax to be subject to that city's withholding requirements even if the employer does not do business in that city.

• Exempts employers that paid $500,000 or less in total wages in the preceding calendar year and have fewer than 10 employees from withholding requirements for resident employees.

• Permits cities imposing income tax to enter into agreements with the Michigan Department of Treasury for administration, enforcement, and collection of city income taxes, with the department retaining a portion of collected taxes to cover administrative costs.

• Establishes that when the Department of Treasury administers city income taxes, it shall do so pursuant to 1941 PA 122 (MCL 205.1-205.31), with those provisions taking precedence in case of conflicts with city ordinances.

• Clarifies withholding rate requirements for residents (up to 3%) and nonresidents (up to 50% of resident rate) based on compensation and location of work.