4893: Small Business Alternative Credit* (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Form 4893 calculates the 2025 Corporate Income Tax Small Business Alternative Credit. It reports gross receipts, adjusted business income, and any credit reductions based on allocated income and gross receipts.
Who files this form
Form 4893 is used to claim the 2025 Michigan Corporate Income Tax Small Business Alternative Credit. All taxpayers claiming this credit must include Form 4894, the CIT Schedule of Shareholders and Officers.
The credit is not available if any of these conditions apply:
- Gross receipts exceed $20,000,000.
- Adjusted business income after loss adjustment exceeds $1,795,300.
- Any shareholder or officer has allocated income after loss adjustment over $180,000, as determined on Form 4894.
- Compensation and director fees of a shareholder or officer exceed $180,000.
What you'll need
Have these forms and amounts available to complete Form 4893:
- Form 4894, CIT Schedule of Shareholders and Officers. You must include it when claiming the credit. Form 4893 uses its compensation, director fee, and allocated income information.
- Form 4891. You need the tax liability before this credit from line 38 and any federal net operating loss carryback or carryover from line 20.
- Your gross receipts, business income, and any capital loss carryback or carryover amounts.
- Your taxpayer name and Federal Employer Identification Number (FEIN).
Common mistakes
- Leaving out Form 4894. The form says all taxpayers claiming this credit must include it.
- Claiming the credit despite an eligibility limit. Check all four conditions that make the credit unavailable, including the shareholder and officer limits.
- Missing a required reduction. The credit must be reduced if any shareholder or officer has allocated income after loss adjustment over $160,000 but not over $180,000, or if gross receipts exceed $19,000,000 but are not more than $20,000,000.
- Overlooking the short-tax-year note. The Reduced Credit Table directs taxpayers with tax years shorter than 12 months to the instructions.
Questions people ask
How is adjusted business income calculated on this form?
Add business income on line 3, capital loss carryback or carryover on line 4, and federal net operating loss carryback or carryover on line 5. Enter the loss amounts as positive numbers. Then add compensation and director fees of active shareholders and officers from lines 7 and 8 to get adjusted business income on line 9.
How is the credit calculated before reductions?
Multiply adjusted business income on line 9 by 1.8% to calculate the Small Business Alternative Tax on line 10. If the result is negative, enter zero. Subtract line 10 from the tax liability on line 2 to calculate the credit on line 11. Again, enter zero if the result is negative.
How does allocated income affect the credit?
The Reduced Credit Table lists these percentages of the credit:
- $0 to $160,000: 100%.
- $160,001 to $164,999: 80%.
- $165,000 to $169,999: 60%.
- $170,000 to $174,999: 40%.
- $175,000 to $180,000: 20%.
The table directs taxpayers with tax years shorter than 12 months to the instructions.
What if gross receipts are more than $19 million?
If gross receipts exceed $19,000,000 but are not more than $20,000,000, complete lines 15 through 18 for an additional reduction. Subtract $19,000,000 from gross receipts, divide the difference by $1,000,000, and subtract that percentage from 100%. Multiply the remaining percentage by line 14. Gross receipts over $20,000,000 make the credit unavailable.
Where do I enter the credit on Form 4891?
If gross receipts are $19,000,000 or less, carry the amount from Form 4893, line 14, to Form 4891, line 39. If gross receipts exceed $19,000,000 but are not more than $20,000,000, carry the amount from line 18 to Form 4891, line 39.