Mich. Admin. Code R 206.16 — Credit allowed resident for income tax paid to other states

Rule 16. (1) A resident taxpayer is allo wed a credit for tax imposed on income
which is also subject to tax by another state of the United St ates, or political subdivision
thereof, or the District of Columbia. This credit is limited to the smaller of (a) the
Michigan tax on such income or (b) the tax impos ed by the other state. The credit is

that portion of the Michigan income tax that the income which is subject to tax in
both states bears to total taxable income. Example:
Michigan wages......................................... $ 8,000.00
Wages earned in another state………………… 2,000.00
United States government bond interest………. 1,000.00
_________
Adjusted gross income………………………… 11,000.00
United States government bond interest……… 1,000.00
_________
Total taxable income………………………….. 10,000.00

Income subject to tax in both states $2,000.00 or 20%

Taxpayer has 2 exemptions
2 X $1,500.00 ………………………………… 3,000.00
Taxable balance ……………………………… 7,000.00
Tax @ 4.6%........................................................ 322.00
Tax paid to other state; $70.00
Maximum credit allowed 20% of $322.00…… $ 64.00

In this example, the taxpayer cannot claim the full $70.00 paid to another state
as his credit is limited to 20% of $322.00 or $64.40. The cred it cannot exceed the
amount paid to another state.
(2) Since Michigan allows a subtraction of in come attributable to other states the
credit is ordinarily limited to tax imposed on compensation received for services
rendered in another state.