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Business Licensing Essentials: How to Calculate Business License and Declining Rates

Every month in 2022, the Municipal Association’s Local Revenue Services is hosting “Business Licensing Essentials,” a series of virtual training sessions on the specifics of the business licensing process. The session on the process for calculating business licenses will be Wednesday, March 9, 10 to 11:30 a.m. 

Under Act 176, which standardized business licensing practices across the state, local governments with business license taxes must calculate those taxes for each type of business using the current version of the North American Industry Classification System, assigning each business a NAICS code and using the 2021 class schedule to place businesses in a rate class. Most commonly, businesses based on their rate class are charged a base rate, as well as a rate for each additional $1,000 of revenue beyond the amount covered by the base rate. Many municipalities choose to apply a declining rate per $1,000, where the percentage charged declines as the business’s gross income exceeds various thresholds.
Learn more about the standardization process.