The cities of Lansing and East Lansing collect income taxes from residents and from people who work in the cities but live elsewhere.
Work from home orders will have an impact on non-residents who pay income taxes in either city.
The tax rates are the same in Lansing and East Lansing. If you live in the city but work elsewhere, it’s one half of one percent. It’s the same if you work in either city but live outside the city limits. If you live and also work in the city, you pay one percent.
Non-residents who are required to work from home, though, are not subject to taxation for the days they aren’t going to their workplace. That will have an impact on tax revenues, and will mean a little extra work for taxpayers who want to recoup the difference when they file next year.
The city of Lansing’s tax administrator, Judy Kehler, says eligible workers will need to document the time they were required to work from home. “I would have a log that indicates Monday through Friday, I worked in whatever municipality that is, so keeping records so that they can prove that," she explains, "and then also obtaining a letter from your employer would be great if an employer would be willing to do that.”
DeMar Boyd is the tax administrator for the city of East Lansing. He says some employers may still be withholding for income taxes under these circumstances, while others may not. He suggests checking with your payroll department. Boyd states that “I would imagine that there are some places that are discontinuing that, and then there are some places that are doing it, just because there is a lot of behind the scenes work that goes into some of those changes. So, that’s something that we would leave to those employers. There’s no mandate to handle it one way or the other.”
Michigan State University, the city’s largest employer, is continuing to withhold taxes from employees who do not live in East Lansing.
As many as 15,000 taxpayers might experience an impact on their city of Lansing income taxes. In East Lansing, it’s not clear how many people this might affect.
It's unclear how many taxpayers are affected in East Lansing. 2019 was the first year East Lansing collected an income tax, and with the filing deadline pushed back from April 30th to July 31st, not everyone has filed yet.
This tax obligation only affects people who are under orders to work from home. It’s unclear if there will be exceptions for people who could be going to their workplace but are choosing to work from home instead.