Michigan has a flat state income tax rate of 4.25% on all taxable income. Some Michigan cities also impose their own income taxes, which can add to your overall tax burden.
Michigan State Tax Rate
| Taxable Income | Tax Rate |
|---|---|
| All income | 4.25% |
Michigan's flat tax rate simplifies withholding calculations. Every dollar of taxable income is taxed at the same 4.25% rate, based on Michigan Department of Treasury guidelines.
City Income Taxes
Michigan allows cities to levy their own income taxes. Currently, 24 Michigan cities impose a local income tax:
| City | Resident Rate | Non-Resident Rate |
|---|---|---|
| Detroit | 2.4% | 1.2% |
| Grand Rapids | 1.5% | 0.75% |
| Flint | 1.0% | 0.5% |
| Lansing | 1.0% | 0.5% |
| Ann Arbor | 1.0% | 0.5% |
If you work in Detroit but live elsewhere, you'll pay the 1.2% non-resident rate on wages earned in Detroit, plus state tax. Detroit residents pay 2.4% plus state tax for a combined 6.65% rate.
What You'll See on Your Paystub
A Michigan worker's paystub includes federal income tax withholding, state tax, and possibly city tax:
| Deduction | Rate | Notes |
|---|---|---|
| Federal Income Tax | Varies | Based on W-4 and income |
| Social Security | 6.2% | Up to $181,200 wage base |
| Medicare | 1.45% | No wage limit |
| Michigan State Income Tax | 4.25% | Flat rate on all taxable income |
| City Income Tax | 0% - 2.4% | If working in a city with local tax |
Michigan Personal Exemption
Michigan provides a personal exemption that reduces taxable income:
| Exemption Type | Amount (2026) |
|---|---|
| Personal Exemption | $5,600 |
| Dependent Exemption | $5,600 each |
| Special Exemption (disabled, deaf, blind) | $3,400 |
Reciprocity Agreements
Michigan has income tax reciprocity agreements with neighboring states:
- Illinois: Michigan residents working in Illinois pay only Michigan tax
- Indiana: Michigan residents working in Indiana pay only Michigan tax
- Kentucky: Michigan residents working in Kentucky pay only Michigan tax
- Minnesota: Michigan residents working in Minnesota pay only Michigan tax
- Ohio: Michigan residents working in Ohio pay only Michigan tax
- Wisconsin: Michigan residents working in Wisconsin pay only Michigan tax
If you live in Michigan and work in one of these states, file the appropriate exemption form with your employer to avoid double withholding.
Retirement Income
Michigan's retirement income taxation depends on your birth year:
- Born before 1946: Pension income is exempt up to $61,518 (single) or $123,036 (joint)
- Born 1946-1952: Pension income is partially exempt
- Born 1953-1966: Can choose between exemption methods
- Born after 1966: Limited exemptions available
Auto Industry Workers
Special considerations for Michigan's auto industry:
- Union dues may be deductible on Michigan return
- Supplemental unemployment benefits (SUB pay) are taxable
- Buyout packages may have special tax treatment
- Overtime during production peaks affects withholding
Michigan vs. Neighboring States
| State | State Rate | Local Taxes? |
|---|---|---|
| Michigan | 4.25% | Yes (24 cities) |
| Ohio | 0% - 3.5% | Yes (many cities) |
| Indiana | 3.05% | Yes (all counties) |
| Wisconsin | 3.5% - 7.65% | No |
Comparing Take-Home Pay
Here's how a $75,000 annual salary in Michigan compares:
| Location | Effective Rate | Annual State/Local Tax |
|---|---|---|
| Michigan (no city tax) | ~3.9% | ~$2,900 |
| Michigan (Detroit resident) | ~6.3% | ~$4,700 |
| Indiana (Marion Co.) | ~4.9% | ~$3,650 |