SB 584 — Individual income tax: withholding requirements; mandatory withholding requirement by pension administrators; make optional. Amends sec. 703 of 1967 PA 281 (MCL 206.703).

SB-584, As Passed Senate, February 19, 2026 SENATE BILL NO.

(1) A person who that disburses pension or annuity payments , except as otherwise provided under this section, shall may withhold a tax in an amount computed by applying the rate prescribed in section 51 on the taxable part of payments from an employer pension, annuity, profit-sharing, stock bonus, or other deferred compensation plan as well as from an individual retirement KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 arrangement, an annuity, an endowment, or a life insurance contract issued by a life insurance company.

(3) Except as otherwise provided under this section, for tax years that begin before July 1, 2016, every flow-through entity in this state shall withhold a tax in an amount computed by applying the rate prescribed in section 51 to the distributive share of taxable income reasonably expected to accrue after allocation and KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 apportionment under chapter 3 of each nonresident member who is an individual after deducting from that distributive income the same proportion of the total amount of personal and dependency exemptions of the individual allowed under this act.

As used in this subsection, KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 "business income" means that term as defined in section 603(2).

All of the taxes withheld under this section shall accrue to the state on April 15, July 15, and October 15 of the flow-through entity's tax year and January 15 of the following year, except a flow-through entity that is not on a calendar year basis shall substitute the appropriate due dates in KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 the flow-through entity's fiscal year that correspond to those in a calendar year.

KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 (7) (10) Every publicly traded partnership that has equity securities registered with the securities and exchange commission Securities and Exchange Commission under section 12 of title I of the securities and exchange act of 1934, 15 USC 78l, shall not be subject to withholding.

(9) (12) A person required by this section to deduct and withhold taxes on income under this section holds the amount of tax withheld as a trustee for this state and is liable for the payment of the tax to this state or, if applicable, to the community college and is not liable to any individual for the amount of the KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 payment.

(16) Notwithstanding the requirements of subsections (4) and (5), if a flow-through entity receives an exemption certificate from a member other than a nonresident individual, the flow-through entity shall not withhold a tax on the distributive share of the KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 business income of that member if all of the following conditions are met:

Any copy of the exemption certificate KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1 shall be maintained in a format and for the period required by 1941 PA 122, MCL 205.1 to 205.31.

This amendatory act takes effect January KAS S03540'25_SB0584_INTR_1S03540'25_SB584_APS_1 ubqzn7p3jrqw 1, 2026.

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