Michigan Treasury Provides Penalty & Interest Relief on 2025 CIT Estimated Payments
Michigan businesses navigating the simultaneous impacts of the federal One Big Beautiful Bill and Michigan’s own Public Act 24 decoupling faced an exceptionally difficult 2025 estimated tax environment — with federal and state rules pulling corporate taxable income in opposite directions, often in real time. The Michigan Department of Treasury has recognized this complexity and announced it will waive penalty and interest on certain underpaid 2025 Corporate Income Tax estimated payments. At Kal Onomato, our state and local tax advisory team helps Michigan and multi-state businesses understand their eligibility, prepare the required waiver documentation, and ensure full CIT liability is paid before the April 30, 2026 deadline.
What Drove the Relief: Two Laws Pulling in Opposite Directions
The Michigan Treasury’s decision to provide relief is rooted in an unusual and genuinely difficult tax compliance situation that emerged in 2025. Two major law changes — one federal, one state — created conflicting adjustments to corporate taxable income that made accurate estimation of Michigan CIT liability exceptionally challenging, particularly for the July and October 2025 installments when both changes were either newly enacted or freshly signed into law. Michigan Treasury concluded that these circumstances constituted reasonable cause for underpayments attributable to the two laws.
The OBBB reinstated and significantly expanded several federal business deductions — including 100% bonus depreciation, immediate R&D expensing, restored EBITDA-based interest deduction limits, and pass-through permanence provisions. For many Michigan corporations, these changes substantially reduced federal taxable income mid-year, creating immediate uncertainty about how that reduction would affect Michigan CIT calculations.
Michigan responded by decoupling from many OBBB provisions. PA 24 requires Michigan taxpayers to add back to their state return certain deductions allowed under the new federal rules. The result: federal taxable income decreased significantly under OBBB, but Michigan taxable income was partially or fully restored by the PA 24 add-backs — often increasing Michigan CIT liability relative to pre-OBBB estimates that taxpayers had already made.
📌 Michigan Treasury’s reasonable cause conclusion: The Treasury determined that taxpayers who underpaid CIT estimated payments between July 2025 and January 2026 because of the interaction between OBBB and PA 24 had “reasonable cause” for those underpayments. This determination is the legal foundation for the penalty and interest waiver — and it applies specifically and exclusively to underpayments attributable to these two laws. Our SALT advisory team helps Michigan businesses document the attribution of their underpayment to OBBB and PA 24 as part of the waiver request process.
Who Is Eligible: Specific Requirements for the CIT Relief
The relief is carefully scoped — not every Michigan taxpayer or every underpayment qualifies. Michigan businesses should review each eligibility condition carefully before assuming they are covered. Our tax advisory team reviews eligibility for every Michigan CIT client and prepares the documentation needed to support a successful waiver request.
| Eligibility Condition | Requirements & Details | Status |
|---|---|---|
| Taxpayer type | CIT taxpayers only — the relief does not extend to individual taxpayers or flow-through entities (S corps, partnerships, LLCs taxed as pass-throughs) | CIT Only |
| Estimated payment due July 15, 2025 | Underpayments on the July 15, 2025 installment are covered — this was the first payment after OBBB was signed on July 4 | Covered |
| Estimated payment due October 15, 2025 | Underpayments on the October 15, 2025 installment are covered — PA 24 was signed October 7, creating a very short window to adjust | Covered |
| Estimated payment due January 15, 2026 | Underpayments on the January 15, 2026 installment are covered for calendar-year filers | Covered |
| Fiscal-year filers | Fiscal-year CIT filers whose estimated payment due dates fell within the July 2025 – January 2026 window are also eligible | Eligible |
| Full annual CIT liability paid by return due date | Calendar-year filers must pay their full 2025 CIT liability by April 30, 2026. Fiscal-year filers by their applicable annual return due date. This is an absolute condition — partial payment disqualifies the waiver | Required — April 30, 2026 |
| Underpayment attributable to OBBB / PA 24 | The underpayment must be specifically attributable to the OBBB provisions and/or the PA 24 add-back requirements — general underpayment without this attribution does not qualify | Attribution Required |
⚠️ The relief excludes individuals and flow-through entities. This waiver applies exclusively to corporate CIT filers. Individual taxpayers and flow-through entity owners who experienced similar complexity may still request penalty waivers under Michigan’s standard reasonable cause rules — but those requests are evaluated on a case-by-case basis with no pre-approved relief mechanism. Our tax advisory team assists both CIT filers and individual/flow-through clients in building the strongest possible waiver documentation for their specific situation.
The Two-Step Process: Relief Is Not Automatic
One of the most important aspects of this relief is that it is not automatic. Eligible taxpayers must follow a specific two-step process to claim the waiver. Michigan businesses that assume they are protected because they qualify under the eligibility criteria — without completing both steps — will not receive the waiver. Our tax advisory team manages this process for Michigan CIT clients from Treasury notice receipt through waiver submission.
Wait for Michigan Treasury to Issue a Notice Identifying the Underpayment
Michigan Treasury will initiate the process by issuing one of two types of notices to affected taxpayers: a notice of additional tax due or a notice of refund adjustment. Both types of notice will identify the underpayment amount and the related penalty and interest assessed.
Taxpayers should not attempt to submit a waiver request before receiving a Treasury notice. The notice is the triggering document — without it, there is no specific underpayment amount or penalty assessment to reference in the waiver request.
After Receiving the Notice, Submit a Written Request Referencing PA 24
After receiving the Treasury notice, the taxpayer must send a written waiver request to Michigan Treasury. The request must: reference Treasury’s guidance on the OBBB/PA 24 relief; and identify the amount reported on Form 4891, Line 13 — the PA 24 miscellaneous adjustment line on the Michigan CIT return.
The Treasury does not require a detailed legal explanation or extensive documentation of the underpayment calculation. Citing PA 24 and identifying the Form 4891, Line 13 amount is sufficient. However, the request must be submitted in writing — a phone call or informal communication will not satisfy the requirement.
📋 Timing the waiver request is critical. The waiver request must be submitted after — not before — the Treasury notice is received. Michigan CIT filers who paid their full 2025 annual liability by April 30, 2026 should expect Treasury notices to begin arriving in the weeks following the filing deadline. Our tax advisory team monitors Treasury notice receipt for every Michigan CIT client under our management and prepares the waiver letter immediately upon receipt — ensuring no eligible client loses the relief due to delayed response.
What About Individuals and Flow-Through Entities?
Because the OBBB and PA 24 decoupling also created complexity for individual taxpayers and flow-through entity owners in Michigan, many non-CIT taxpayers are asking whether similar relief is available to them. The answer is nuanced. The formal penalty and interest waiver announced by Michigan Treasury applies exclusively to CIT filers. However, individual taxpayers and flow-through entity owners who can demonstrate that their underpayment was attributable to the same OBBB/PA 24 interaction may still pursue penalty relief under Michigan’s standard reasonable cause rules — but those requests are evaluated on a case-by-case basis without the pre-approved relief mechanism available to CIT filers.
📌 Standard reasonable cause requests require more documentation. Unlike the CIT relief — where citing PA 24 on Form 4891, Line 13 is sufficient — standard reasonable cause waiver requests for individuals and flow-through entities require a more substantive explanation of the specific facts, timing, and calculations that demonstrate the underpayment was the result of reasonable reliance on available guidance during a period of genuine uncertainty. Our SALT advisory team prepares reasonable cause waiver requests for Michigan individual and flow-through clients affected by the OBBB/PA 24 complexity — building the strongest possible factual record for each request.
Four Actions Michigan Businesses Should Take Right Now
The April 30, 2026 annual return deadline for calendar-year CIT filers is the most immediate and critical milestone — but preparation should begin now, before that deadline arrives. Our tax advisory team manages every one of these steps for Michigan CIT clients under active advisory engagement. Visit our services page or contact us directly at kal-onomato.com/contact to get started.
Review Your 2025 CIT Estimated Payment Activity
Pull the records for your July 15, October 15, and January 15 estimated CIT payments and compare the amounts paid to what your full annual CIT liability is expected to be. If there is a gap — any underpayment on those three installments — assess whether the underpayment can be attributed to the OBBB deduction changes and/or the PA 24 add-back requirements. This attribution analysis is the foundation of your waiver request and should be documented now, before the Treasury notice arrives. Our tax advisory team conducts this analysis for Michigan CIT clients as the first step of our OBBB/PA 24 relief management process.
Ensure Full 2025 CIT Liability Is Paid by the Annual Return Due Date
This is an absolute eligibility condition — no exception. Calendar-year CIT filers must pay their full 2025 Michigan CIT liability by April 30, 2026 to qualify for the penalty and interest waiver. Taxpayers who pay only a portion of their 2025 liability by that date, or who extend their filing without also paying the full liability, will not be eligible for the relief. If your 2025 CIT liability calculation involves complexity related to PA 24 add-backs, OBBB deductions, or other adjustments, contact our tax advisory team immediately to ensure your return is ready and your payment is complete before the deadline.
Monitor for Treasury Notices and Respond Promptly
After the April 30, 2026 filing deadline passes, Michigan Treasury will begin issuing notices of additional tax due or refund adjustment to affected taxpayers. These notices will identify the specific underpayment and related penalty and interest — and they are the trigger for your written waiver request. Assign a specific person in your finance or tax function to monitor Treasury correspondence after the filing deadline, and ensure that any Treasury notice is escalated immediately to your tax advisor rather than sitting in a mail queue. Delayed response to a Treasury notice is one of the most common ways eligible businesses lose available relief. Our tax team monitors Treasury correspondence for every Michigan CIT client under our management.
Prepare the Written Waiver Request Before You Need It
Because Treasury does not require a detailed explanation — only a citation of PA 24 and the Form 4891, Line 13 amount — the waiver request letter is straightforward to prepare. The most efficient approach is to draft the letter template now, with only the specific underpayment amount left to be filled in when the Treasury notice arrives. This way, the waiver request can be submitted within days of receiving the notice — rather than days or weeks after, during which additional interest may continue to accrue. Our tax advisory team prepares waiver request templates for every eligible Michigan CIT client before their Treasury notice arrives, ensuring same-day submission capability the moment the notice is received.
How Kal Onomato Helps Michigan and Multi-State Businesses Navigate OBBB/PA 24 Relief
At Kal Onomato, our licensed CPA and tax advisory team provides Michigan and multi-state businesses with the state and local tax expertise needed to navigate complex relief programs like this one — ensuring eligibility is confirmed, deadlines are met, and every available waiver is pursued and documented properly. Our work is aligned with IRS requirements, Florida state accounting standards, and recognized public finance frameworks (JMCO Government Finance), and our multi-state practice means we understand both federal OBBB provisions and their state-level decoupling implications simultaneously.
- 2025 CIT estimated payment attribution analysis — our SALT advisory team analyzes your 2025 estimated payment activity, quantifies the underpayment attributable to OBBB and PA 24, and documents the attribution in a format that supports the waiver request and satisfies Treasury’s reasonable cause standard.
- 2025 Michigan CIT return preparation with PA 24 compliance — our tax preparation team prepares Michigan CIT returns with full PA 24 add-back calculations properly reflected on Form 4891, Line 13 — ensuring the annual return accurately captures the decoupling adjustments and that the April 30, 2026 payment is complete and correct.
- Treasury notice monitoring and same-day waiver submission — our tax advisory team monitors Treasury correspondence for Michigan CIT clients, has the waiver request letter pre-drafted and ready, and submits the written waiver request within one business day of receiving the Treasury notice — minimizing any additional interest that could accrue during a slow response period.
- Individual and flow-through reasonable cause waiver support — for Michigan individual taxpayers and flow-through entity owners who do not qualify for the CIT relief but experienced genuine OBBB/PA 24 complexity, our tax advisory team prepares substantive reasonable cause waiver requests documenting the specific facts, timing, and good-faith reliance that support penalty relief under Michigan’s standard reasonable cause rules.
- Multi-state OBBB and decoupling strategy — for businesses operating in multiple states, the interaction between OBBB federal deductions and each state’s conformity or decoupling position creates a complex mosaic of state tax obligations. Our financial advisory team coordinates multi-state OBBB analysis across every state in which you have filing obligations — ensuring your federal OBBB elections are optimized against the complete state tax picture, not just one jurisdiction at a time. Read results on our client stories page.
🤖 The April 30 Deadline Cannot Be Recovered — Start Now
For calendar-year Michigan CIT filers, April 30, 2026 is the non-negotiable gateway to this relief. Missing it — or paying only part of the annual liability — permanently forfeits eligibility for the penalty and interest waiver, regardless of how well-documented the underlying OBBB/PA 24 attribution is. Our tax advisory team and AI financial platform manage every deadline, notice, and filing for Michigan CIT clients under active engagement — so nothing falls through the cracks. Schedule your free consultation today →
Frequently Asked Questions About Michigan’s 2025 CIT Estimated Payment Relief
Does Your Business Qualify for Michigan’s 2025 CIT Penalty Waiver?
Book a free 30-minute consultation with Kal. We will review your 2025 CIT estimated payment activity, assess eligibility for the OBBB/PA 24 relief, confirm your April 30, 2026 payment plan, and prepare your waiver request — so you capture every dollar of available relief before the window closes.
