Michigan Employer Payroll — MI-W4, Forms 5080/5081, UIA 1028 & City Tax

Register the business for Michigan withholding and unemployment insurance. A Michigan employer must obtain a Withholding Account Number from the Department of Treasury (via Form 518) and a UIA Account Number from the Unemployment Insurance Agency via MiWAM. If employees live or work in Detroit, Pontiac, Hamtramck, or Highland Park, city registration is included in Form 518; Grand Rapids requires a separate Form GR-SS-4 with the city.

Collect a completed Form MI-W4 from every new hire on or before the first day of work — federal Form W-4 does not substitute. If the employee lives or works in one of the 24 city-tax cities, collect the city-specific certificate as well (Form DW-4 for Detroit, Form GRW-4 for Grand Rapids, city-equivalent for others). Employees claiming more than 10 exemptions or claiming exempt while earning over $200/week trigger mandatory Form MI-W4 forwarding to Treasury within 10 business days.

For each pay period, compute Michigan state income tax withholding at the flat 4.25% rate after subtracting the per-period personal exemption ($5,800 ÷ pay periods per year, multiplied by allowances claimed on MI-W4 Line 6). For employees subject to city income tax, compute the applicable city withholding separately — Detroit resident 2.4%, Detroit nonresident 1.2% (on Detroit-day-weighted wages per DW-4 percentage), Grand Rapids resident 1.5%, Grand Rapids nonresident 0.75%, or the applicable rate for other UCITO cities.

Remit accumulated Michigan state withholding (and any Michigan sales/use tax) by filing Form 5080 — Sales, Use and Withholding Taxes Monthly/Quarterly Return via Michigan Treasury Online (MTO). Filing frequency (quarterly for most small employers, monthly for those over the $3,600 annual threshold, accelerated EFT for employers over $480,000 annual withholding) is assigned by Treasury at registration; verify the assigned frequency on file. For Detroit withholding, file the parallel Form 5321 through MTO on the same monthly/quarterly schedule.

Each quarter, file Form UIA 1028 — Employer's Quarterly Wage/Tax Report via MiWAM, reporting each employee's gross wages for the quarter (capped at the $9,500 annual taxable wage base cumulatively). Compute the UIA contribution by multiplying taxable wages by the employer's assigned rate from Form UIA 1771 (the Tax Rate Determination issued each December). The due date is the 25th of the month following quarter-end — five days later than Form 5080's 20th.

Track Michigan Earned Sick Time Act (ESTA, effective 21 February 2025) accrual and usage for all employees. ESTA replaced PMLA as of 21 February 2025: employers with 11+ employees must provide up to 72 hours/year of paid sick time (accruing at 1 hour per 30 hours worked); employers with 10 or fewer provide up to 40 hours. Conduct a quarterly worker-classification spot-check using the Michigan economic reality test (UIA) and IRS 20-factor test (withholding) to identify any contractors who should be reclassified as employees.

By 28 February of the year following the tax year, file Form 5081 — Sales, Use and Withholding Taxes Annual Return via MTO, transmitting W-2 data (EFW2 format for 250+ W-2s; paper or MTO upload for fewer). Reconcile total withholding remitted across all 5080s against the W-2 totals. For Detroit, file Form 5323 (DW-3 annual reconciliation) through MTO simultaneously. For Grand Rapids, file Form GRW-3 directly with the City of Grand Rapids Income Tax Department by the last day of February. Issue W-2s to employees by 31 January.