Pontiac, MI City Income Tax: Who Files, Rates, and Deadlines

The Pontiac, MI city income tax is 1% for residents and 0.5% for non-residents who earn money from work performed inside the city. Corporations doing business in Pontiac pay 1% on net profits attributable to city activity.¹² Returns are due April 30 on Form P-1040(R) for residents or P-1040(NR) for non-residents. Pontiac is one of only 24 Michigan cities authorized to collect a local income tax, which is why it catches so many commuters by surprise.

Who Has to File

You owe a return if your taxable income exceeds your personal and dependency exemptions, even if you weren’t required to file federally. Each exemption is worth $600, and the rules for counting dependents mirror the federal return.³ Additional $600 exemptions apply if you are 65 or older, blind, deaf, or permanently disabled, and each qualifying condition counts separately.⁴

Residents owe Pontiac tax on all their income, no matter where it was earned. If you were domiciled in Pontiac or lived there for any part of the year, you are a resident for that period. Non-residents only file if they earned wages, commissions, or business profits from work actually performed inside the city limits.⁵

What Income Is Taxed

For residents, the tax reaches wages, salaries, bonuses, commissions, tips, and net profits from a business or profession. Rental income from Pontiac property and capital gains on real or tangible personal property located in the city are also taxable.

For non-residents, the reach is narrower: pay for work actually done in Pontiac, a share of business profits from activity conducted in the city, and gains or rent tied to property physically located there. Disability payments received after all vacation, holiday, and sick pay have been used up do not count as compensation for work in the city.⁵

Partnerships that did business in Pontiac file Form P-1065, and each partner picks up their share of net profit on the individual return.¹

Several common income sources are fully exempt:

Social Security benefits
Pension and annuity distributions, including disability pensions
IRA withdrawals taken after age 59½
Unemployment compensation and supplemental unemployment benefits
Public assistance (welfare) payments

The IRA age is worth watching. An early IRA withdrawal, before 59½, may be subject to Pontiac tax even though pensions are broadly exempt.³

Credit If You Also Paid Another Michigan City

Pontiac residents who work in another Michigan city that levies its own income tax can claim a credit so the same wages aren’t taxed twice. The credit is 0.5% of the income taxed by the other city, capped at the actual amount you paid to that city. Complete a separate worksheet for each city where you filed a non-resident return.⁴ Part-year residents count only the income that is both taxable by Pontiac as a resident and by the other city as a non-resident. This is one of the most commonly missed items on Pontiac returns.

How to File

Residents use Form P-1040(R); non-residents use P-1040(NR). Both are available from the city’s Income Tax Division page.⁶ Gather your W-2s from every employer and any 1099s before you start.

You can file and pay electronically through the city’s portal at michigan-pontiac.insourcetax.com. Paper returns and any payment go to:

City of Pontiac Income Tax Division
P.O. Box 530
Eaton Rapids, MI 48827-0530⁷

Deadline, Extensions, and Late Penalties

Returns are due on or before April 30, or within four months after the end of your fiscal year if you don’t file on a calendar year. When April 30 falls on a weekend or holiday, the deadline moves to the next business day.¹

You can request up to a six-month extension by writing to the Income Tax Division before the original due date, and the city may also grant an extension matching a federal extension. An extension moves the filing date only, not the payment date. Estimate what you owe and send it with the extension request. If you expect a refund or owe nothing, no extension request is needed.¹

Unpaid tax carries a penalty of 1% per month, up to a maximum of 25% of the balance.³ Interest accrues on top of that. The interest rate is set by the State of Michigan through its Revenue Administrative Bulletin, revised every six months, and applied as a daily factor to the outstanding balance. For the current rate, call the Income Tax Division at (248) 758-3236 or check the Michigan Department of Treasury site.

Estimated Payments If Nothing Is Withheld

If your income isn’t subject to Pontiac withholding, such as self-employment earnings, rental income, or business profits, you probably need to make quarterly estimated payments. You can pay the full amount with the first installment or split it into four equal payments due April 30, June 30, September 30, and January 31 of the following year. Corporations on a fiscal year follow a different schedule, with payments due in the 4th, 6th, 9th, and 13th months after the start of the taxable year.¹

If You Employ People Who Work in Pontiac

Employers with workers in Pontiac must withhold the city tax from paychecks and send it to the city. Register using Form P-SS-4 from the Income Tax Division page. The city publishes a Withholding Tax Guide covering calculation and reporting, and W-2 and W-3 data can be submitted electronically at year-end.⁷ When withholding is done correctly, employees still file an annual return but usually owe little or nothing at that point.

1
City of Pontiac. City of Pontiac Income Tax – Frequently Asked Questions
2
Michigan Legislature. MCL 141.611 – Excise Tax on Incomes; Rates
3
City of Pontiac. Form CF-1040 (NR) Individual Return and Instructions for Non-Residents
4
City of Pontiac. City of Pontiac Resident Individual Income Tax Return
5
Michigan Legislature. MCL 141.613 – Types of Nonresident Income to Which Tax Applicable
6
City of Pontiac. Tax Forms
7
City of Pontiac. Income Tax