Michigan has a flat 4.25% state income tax — but some cities add local taxes, and retirement income rules are complex.
Michigan Tax Rate 2026
| Income Level | Tax Rate |
|---|---|
| All taxable income | 4.25% |
Michigan’s flat rate makes calculation straightforward — unless you live in a city with local income tax.
How Much Will I Pay in Michigan Tax?
| Taxable Income | Michigan Tax | Effective Rate |
|---|---|---|
| $30,000 | $1,275 | 4.25% |
| $50,000 | $2,125 | 4.25% |
| $75,000 | $3,188 | 4.25% |
| $100,000 | $4,250 | 4.25% |
| $150,000 | $6,375 | 4.25% |
| $200,000 | $8,500 | 4.25% |
| $300,000 | $12,750 | 4.25% |
Before personal exemptions
Michigan Personal Exemptions
| Filing Status | Exemption Amount (2026) |
|---|---|
| Each taxpayer | $5,600 |
| Each dependent | $5,600 |
| Age 65+ | Additional exemption may apply |
| Disabled | Additional $2,900 |
| Unemployed for 6+ months | Additional $2,900 |
Exemption Calculation
A family of four could have exemptions totaling $22,400 ($5,600 × 4), significantly reducing taxable income.
Michigan Retirement Income Rules
Michigan’s retirement income taxation is based on birth year:
Born Before 1946
| Income Type | Tax Treatment |
|---|---|
| Social Security | Exempt |
| Public pension | Exempt |
| Private pension | Exempt up to $61,518 (single) / $123,036 (joint) |
| 401(k), IRA | Exempt up to $61,518 (single) / $123,036 (joint) |
Born 1946-1952
| Income Type | Tax Treatment |
|---|---|
| Social Security | Exempt |
| Public pension | Exempt up to $61,518 (single) / $123,036 (joint) |
| Private pension | Partial exemption based on formula |
| 401(k), IRA | Partial exemption |
Born 1953-1962
| Income Type | Tax Treatment |
|---|---|
| Social Security | Exempt |
| Public pension | Wait until age 67 for exemption |
| Private pension | Wait until age 67, reduced amount |
| 401(k), IRA | Limited exemption |
Born After 1962
| Income Type | Tax Treatment |
|---|---|
| Social Security | Exempt |
| All other retirement | Generally taxed at 4.25% |
Michigan vs. Other States
| State | Rate | Type | Local Tax? |
|---|---|---|---|
| Michigan | 4.25% | Flat | Yes (some cities) |
| Ohio | 0-3.75% | Progressive | Yes (many cities) |
| Indiana | 3.05% | Flat | Yes (counties) |
| Illinois | 4.95% | Flat | No |
| Wisconsin | 3.5-7.65% | Progressive | No |
Michigan Local/City Income Taxes
Some Michigan cities levy additional income tax:
| City | Resident Rate | Nonresident Rate |
|---|---|---|
| Detroit | 2.4% | 1.2% |
| Grand Rapids | 1.5% | 0.75% |
| Lansing | 1.0% | 0.5% |
| Flint | 1.0% | 0.5% |
| Saginaw | 1.5% | 0.75% |
| Battle Creek | 1.0% | 0.5% |
| Pontiac | 1.0% | 0.5% |
If you work in Detroit, your combined state + city tax could be 5.45-6.65%.
Michigan Tax Credits
| Credit | Maximum |
|---|---|
| Earned Income Tax Credit | 30% of federal EITC |
| Home Heating Credit | Varies by income |
| Homestead Property Tax Credit | Up to $1,700 |
| Farmland Preservation | Varies |
Michigan EITC
Michigan increased its EITC to 30% of the federal credit:
| Federal EITC | Michigan EITC |
|---|---|
| $1,000 | $300 |
| $3,000 | $900 |
| $7,430 (max) | $2,229 |
Homestead Property Tax Credit
Michigan allows a credit for property taxes exceeding 3.2% of household income:
- Available to homeowners AND renters
- Renters use 20% of rent as “property tax equivalent”
- Maximum credit is $1,700
- Seniors 65+ qualify for higher amounts
Michigan Capital Gains
Michigan taxes capital gains as ordinary income at the 4.25% rate. There’s no special rate for long-term gains.
Who Must File a Michigan Tax Return?
You must file if:
- Your Michigan income exceeds your personal exemption amount
- You owe Michigan tax
- You had Michigan tax withheld
- You want to claim a refund or credit
Michigan Sales Tax
| Tax Type | Rate |
|---|---|
| State sales tax | 6% |
| Local sales tax | None |
| Combined | 6% |
Michigan has no local sales tax, so 6% applies statewide.
Michigan Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | 1.38% |
| Median home value | $235,000 |
| Median property tax | $3,243 |
Michigan property taxes are above the national average.
How to File Michigan Taxes
| Method | Cost | Best For |
|---|---|---|
| Michigan Free File | $0 | AGI < $79,000 |
| MiSuite (mifastfile.org) | $0 | All taxpayers |
| Commercial software | $0-$50 | Complex returns |
| Tax professional | $100-$350 | Business owners |
Filing deadline: April 15 (same as federal)
Michigan Tax Strategies
1. Understand Retirement Tier Rules
Your birth year determines retirement income taxation — plan accordingly.
2. Claim Homestead Property Tax Credit
Both homeowners AND renters may qualify for this valuable credit.
3. Maximize EITC
Michigan’s 30% match is among the most generous state EITCs.
4. Consider City Residency Impact
Living outside Detroit but working there means 1.2% instead of 2.4% city tax.
5. Pre-Tax Retirement Contributions
401(k) contributions reduce Michigan taxable income at 4.25%.
Michigan Part-Year and Nonresident Rules
| Status | What’s Taxed |
|---|---|
| Full-year resident | All income |
| Part-year resident | All income during residency + MI-source income |
| Nonresident | Only MI-source income |
Key Takeaways
- Michigan’s flat 4.25% rate applies to all income levels
- Some cities add 1-2.4% local income tax — Detroit is highest
- Social Security is exempt for everyone
- Retirement income rules depend on birth year — older = better
- Michigan EITC adds 30% to the federal credit
- Homestead Property Tax Credit helps renters AND owners
- Property taxes are above average — budget accordingly