MI-461: Excess Business Loss (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Form MI-461 reports federal business income and losses and separates the amounts attributable to Michigan and non-Michigan business activity. It calculates allowable business losses and the Michigan excess business loss that becomes a net operating loss available to clai
Who files this form
Taxpayers who have a federal excess business loss limitation must file Michigan Form MI-461. It determines the Michigan portion of federal business income or loss included in adjusted gross income (AGI), and any Michigan excess business loss that may become a net operating loss (NOL) in the following tax year.
For tax year 2025, the federal business loss limits are:
- $313,000 for single filers, married taxpayers filing separately, and fiduciary filers.
- $626,000 for joint filers.
What you'll need
Include a copy of your federal income tax return with applicable schedules and statements supporting the excess business loss. The listed documents are:
- U.S. Form 1040.
- U.S. Form 1040 Schedules 1, B, C, D, E, and F, as applicable.
- U.S. Forms 461, 4797, and 4835, as applicable.
- Schedule K-1s.
- Any other applicable documentation.
Provide a statement describing the type of business activity and its location, including city and state, for each source of income or loss.
If income or loss is subject to apportionment, include Form MI-1040H. If you have more than 12 entries, use the 2025 Excess Business Loss Continuation Schedule, Form 5606.
Common mistakes
- Do not complete lines 4 through 10 without the line-by-line instructions. The form specifically requires using them.
- Do not include additional income or loss in column D that is not included in U.S. Form 461, line 14.
- Make sure line 3, column D matches U.S. Form 461, line 14. Include amounts from all applicable Forms 5606.
- Do not duplicate adjustments for the same income or loss on Michigan Schedule 1, or report the same income or loss more than once on Schedule NR.
Questions people ask
What identifying number should I enter?
Individual income tax filers enter their full nine-digit Social Security number. Fiduciary filers enter the estate or trust's full Federal Employer Identification Number (FEIN).
How should I show income and losses?
Enter income as a positive number and losses as negative numbers. Report all amounts included in U.S. Form 461, line 14.
Are guaranteed payments to partners Michigan business income?
No. Guaranteed payments to partners are not business income for Michigan purposes. However, guaranteed payments included in U.S. Form 461, line 14 must be combined as one entry on MI-461, with adjustments made as directed in the line-by-line instructions.
When can a Michigan excess business loss be claimed as an NOL?
A Michigan excess business loss becomes a Group 2 NOL available to claim in the following tax year. See Form 5674 and its instructions for more information. The amount in line 10, column F is not attributable to Michigan and is not a Michigan NOL.