Single Business Tax (SBT)

The SBT is the only general business tax levied by the State of Michigan and is a levy on the value a business adds to its product during production, whether the product is automobiles or legal services. The main components of the added value are labor, interest paid, depreciation, and profit. An SBT deduction is allowed for capital investment, and special relief is provided for firms that are labor intensive or have gross receipts below a certain level; complete exemption is allowed for businesses with gross receipts under $350,000.

Treasury Department data show that 58% of Michigan businesses pay $1,000 or less in SBT; 45% of all businesses pay no SBT.

Manufacturing provides the largest part of SBT revenue, roughly 39 percent, but in the last decade its share has declined from about 55 percent. In comparison, the services sector’s share rose from about 10 percent to 18 percent.

The current rate (tax year 2002) is 1.9 percent. The original rate was 2.35 percent, which was reduced to 2.3 percent in 1994. In 1999 legislation was enacted that reduces the rate 0.1 percent each year until the tax is eliminated.

The SBT took effect in 1976 as a replacement for seven business taxes, of which the largest three were the corporate income tax, personal property tax on inventory, and corporate franchise tax

(Source: Michigan in Brief: 2002–03. Public Sector Consultants, Inc.)