Since 2019, the City of East Lansing has levied a tax on income earned in the City.
The income tax — which was approved by voters for a 12-year period — is 1% on people who live and work in East Lansing, and .5% on people who work in the City but live elsewhere. The income tax was also paired with an associated reduction in rates for property taxes in the City.
The net income tax revenue, per the City’s website, is dedicated as follows: “20% to police and fire protection; 20% to the maintenance and improvement of streets and sidewalks, water and sewers systems, and parks, and recreation, and city owned facilities; 60% to supplemental payments for unfunded pension liabilities for retired city employees.”
A brief history of East Lansing’s income tax.
The main purpose of the income tax is to pay into the City’s pension fund, a fact spelled out by where the money goes. When the tax was approved, the projected annual revenue from it was about $5 million dollars.
The onset of the Covid-19 pandemic greatly complicated the administration, projection, and payment of the income tax because local income taxes in Michigan are based on where employees are physically working, rather than where companies are technically located. Many residents and nonresidents began working from home, changing the underlying situation about who — and how much — was being taxed.
For example, residents of Meridian Township that work from home for Michigan State University are not required to pay the East Lansing tax. But an employee for a company in Meridian Township that is working from home in East Lansing would need to pay the City income tax.
The 2021 revenues are projected to fall in a similar range to the 2020 revenues, which were down notably from 2019, the first (and only non-pandemic year) of the income tax to date. For 2019, revenue projections were exceeded by 33%.
How to file your East Lansing income tax return.
To file for the income tax the City provides forms on their webpage. There are forms for individuals (EL-1040), trusts (EL-1041), partnerships (EL-1065) and corporations (EL-1120) to file.
The forms for each group contain two PDFs: one is to actually fill out for filing and the other contains instructions.
Residents, nonresidents, or itinerant residents that had a gross income of over $600 or more in the City must complete and file a return even if they are not required to file a federal return. Filing is required even if an employer did not withhold East Lansing tax in your paychecks, per the instructions for EL-1040 individual filing. You can read more on who needs to file here.
It is important to know whether you live within the City’s boundaries. The City’s income tax webpage provides a boundary map where you can search your address to see if you are within City limits. Not all East Lansing addresses are within the City’s boundary.
Returns are due on or before May 2, 2022.
Got questions? Contact the East Lansing Income Tax office at (517) 319-6862 or email the staff there at email@example.com.