City Work Tax

Withholding for a Hybrid Work Schedule

If an employee is working a hybrid, or non-standard, work schedule, they will have the option to withhold a prorated percentage based on the amount of time worked in East Lansing (or another taxable city i.e. Grand Rapids). Employees may select any prorated amount between 25 and 100%, to two decimal points. The system is unable to accept a percentage less than 25% and changes only impact future pays (the request cannot be backdated).

Additionally, it is advisable that employees keep a work log of the days worked outside of the city. The work log should be retained because employees may be required to furnish the document upon request by a city tax administrator after the employee’s taxes have been filed

FAQ:

  1. I work three days per week in the city of East Lansing and two days per week from my home which does not have a local work tax. How do I update my city withholding to deduct the correct amount of taxes?
    You are required to log into EBS and update the W-4 Local Tax – Location of Work section to the appropriate percentage of time you are working in the city of East Lansing. In this example, you can update your percentage of time working in East Lansing to 60%. You must also re-certify the transaction and save your entry.
  2. What happens if I live in Lansing and work three days per week in East Lansing?
    You will update your work location tax as outlined in question #1. In this example, you will see the city of Lansing tax increase by the difference you are working from home, not to exceed 1%. Our system will withhold the resident rate and subtract the percentage paid to the work location to determine the new resident rate.
  3. What if my work schedule fluctuates each week from being onsite to working from home?
    Since there is no way to be certain of your total annual income earned while working in the city of East Lansing, we recommend that you keep the full .5% tax. You would then need to file an annual tax return with East Lansing to get a refund of the appropriate amount withheld.
  4. Why do I need to certify the transaction?
    Employees are required to ‘certify’ their tax update transactions to declare the accuracy of their taxability. An email confirmation will be generated for you to review the transaction you completed. Based on timing when you enter the transaction, a pop-up message will appear when the transaction will be effective (possibly after the next pay cycle).
  5. Can I prorate the work tax for any Michigan city?
    Yes, you may prorate the work tax for any Michigan city you are working in.

If you have any questions about the city of East Lansing taxes, please refer to the East Lansing Income Tax Website or contact the East Lansing Tax Administrator at 517-319-6862. Payroll and HR are unable to make recommendations on how your taxes should be set up.

Michigan State University