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Michigan State Income Tax: Rates and Who Pays in 2023-2024

Each state’s income tax is a complex system and can differ in rates, credits, deductions, and other factors. And Michigan is no different. Here’s everything you need to know about Michigan’s state income tax during the tax filing season.
Michigan state income tax
Michigan State Income Tax: Rates and Who Pays in 2023-2024
Navigating through Michigan state income tax can be difficult and might sound overwhelming, but we are here to save the day. Explore the details you need about Michigan's state income tax. 
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Each state’s income tax, a tax applied to the money one earns, is a complex system and can differ in rates, credits, deductions, and other factors. And Michigan is no different. However, Michigan follows a flat income tax rate. This means that regardless of their financial circumstances or wealth, the residents must pay the same percentage of their income in taxes. 

On the contrary, Michigan provides certain exemptions that can minimize your taxable income, such as pension income exemption and military service exemption. The state also offers tax credits to reduce overall tax liability, such as the Homestead Property Tax Credit and the Child and Dependent Care Credit. Interest and capital gains can also be deducted from state tax returns for taxpayers born before 1946.

Yes, navigating through Michigan state income tax can be difficult and might sound overwhelming, but we are here to save the day. All you have to do is scroll up and dig into the details you need about Michigan’s state income tax. Meanwhile, check out Beem which offers online tax-filing services to its users regardless of their employment or filing status.

Does Michigan Have a State Income Tax?

Yes, just like several states in the US. But as mentioned earlier, Michigan has a flat rate income tax. So, every individual earning and living in Michigan has to pay a flat 4.05%. On the other hand, the corporate income tax has a flat rate of 6%, and the state sales tax rate is 6%.

Michigan State Income Tax – How much will the income after tax in Michigan with Filing Status

Annual IncomeFiling Status –
Single
Filing Status –
Married Filing Jointly
Filing Status –
Head of Household
$12000$11,703$11,915$11,915
$15000$14,370$14,788$14,788
$20000$18,658$19,575$19,515
$22000$20,373$21,490$21,230
$30000$27,880$28,740$28,090
$35000$31,285$33,028$32,359
$36000$32,122$33,885$33,196
$42000$37,147$39,030$38,221
$45000$39,538$41,603$40,734
$48000$42,172$44,144$43,246
$52000$45,522$47,494$46,596
$54000$48,745$50,844$49,946
$60000$51,695$54,194$53,296
$62000$53,170$55,869$54,971
$65000$55,382$58,382$57,484
$70000$59,070$62,569$61,671
$75000$62,757$66,757$65,859
$80000$66,445$70,944$69,576
$85000$70,132$75,132$73,264
$90000$73,820$79,319$76,951
$92000$75,295$80,994$78,426
$95000$77,507$83,507$80,639
$114000$91,280$98,964$94,540
$115000$91,998$99,702$95,258
$140000$109,935$118,139$113,195
$150000$117,110$125,514$120,370
$160000$124,285$132,889$127,545
$165000$127,873$136,577$127,873
$190000$145,250$155,014$149,026
$185000$142,063$151,327$151,327
$260000$188,942$205,520$192,911
$300000$213,242$234,220$217,211
$350000$243,617$270,095$247,586
$120000$95,585$103,389$98,845
$135000$106,348$114,452$109,608
$170000$131,460$140,264$134,720
$180000$138,635$147,639$141,895
$250000$181,000$198,345$186,836
$28000$25,422$27,025$26,375
$32000$28,772$30,455$29,805
$40000$35,472$37,315$36,546
$44000$38,822$40,745$39,896
$53000$46,360$48,332$47,434
$56000$48,745$50,844$49,946
$58000$50,220$52,519$51,621

Michigan State Income Tax Rates and Tax Brackets

When Michigan’s state income tax rate was implemented in 1968, the rate was 2.6%. However, it became 3.90% in 2008 and increased to 4.25%. But now, it is 4.05%, implemented on March 29, 2023. Moreover, 24 cities also charge local income tax in Michigan. It is 1% to 2.4% for residents, and the rate for non-residents is between 0.5% and 1.2%. Here is a list of those cities. Take a look.

CityResidentNon-resident
Albion1%0.5%
Battle Creek1%0.5%
Benton Harbor1%0.5%
Big Rapids1%0.5%
Detroit2.4%1.2%
East Lansing1%0.5%
Flint1%0.5%
Grand Rapids1.5%0.75%
Grayling1%0.5%
Hamtramck1%0.5%
Highland Park2%1%
Hudson1%0.5%
Ionia1%0.5%
Jackson1%0.5%
Lansing1%0.5%
Lapeer1%0.5%
Muskegon1%0.5%
Muskegon Heights1%0.5%
Pontiac1%0.5%
Port Huron1%0.5%
Portland1%0.5%
Saginaw1.5%0.75%
Springfield1%0.5%
Walker1%0.5%

What is Michigan’s Standard Deduction?

A taxpayer born after 1946 or aged 67 is allowed a deduction against all income, including retirement and pension income. This is called the Michigan Standard Deduction. The individuals falling under this criteria can deduct $20,000 when they opt for a single or married filing a separate return and $40,000 for a married filing a joint return.

How to Calculate Michigan State Income Tax?

Get your adjusted gross income (AGI) to calculate your state income tax. AGI can be found on your income tax return (MI -1040). But there are some exemptions, such as Social Security benefits and retirement income. It would be best to subtract them from AGI to determine your Michigan taxable income.

Also Read: Montana State Income Tax

Do I Have to Pay Michigan State Income Tax?

Filing a state income tax return is mandatory even if you don’t owe any tax. To file the return, the Michigan Department of Treasury deadline generally falls on April 15, but it can vary.

Michigan follows the same filing status as applicable to the federal government. Therefore, your federal filing status determines your state filing status. The state has three filing statuses for individuals: single, married filing jointly, and married filing separately.

So, if your federal return status is married filing jointly, you need to opt for the same status on your Michigan state income tax return. If you have filed your federal return as head of the household or widow(er), opt for the single status. To make the process easy, you can file state taxes with Beem.

How to Pay Michigan State Income Tax?

Michigan residents can file an Individual Income Tax Return (MI-1040) and pay tax on income earned. You can hire a tax professional to do it for you or opt for an electronic payment provided by the Michigan Department of Treasury. Another option is sending a check to the Michigan Department of Treasury, PO Box 30774, Lansing, MI 48929. But make sure that you print your social security number (SSN) and the tax year on the front of the check and make it payable to the ‘State of Michigan’. 

You’ll be penalized late if you don’t pay the tax. How much? Well, you’ll be charged 5% of the total unpaid tax due for the first two months, and then an additional 5% will be added each month after the first two months.

Also Read: Missouri State Income Tax

Am I a Resident for Michigan Income Tax Purposes?

Michigan has rules for determining residency for tax purposes. The Michigan Department of Treasury offers a Residency Status Questionnaire (Form MI-1040H) to help individuals identify their residency status. 

Resident status rules

An individual can have a Michigan resident status if they have a permanent house or are staying in a rented one in Michigan, have obtained a Michigan driver’s license, and have other significant ties to the state. You can also have a resident status if you spend 183 days or more in the state during the tax year; you’ll be considered a resident of Michigan for tax purposes. But, if you have a resident status, you must file your state income tax return as a resident.

Part-year resident status rules

A part-year resident is an individual who is a resident of Michigan for part of the year and a resident of another state for the remaining part of the year. They are taxed on income earned or received while residing in Michigan. 

Non-resident status rules

To be tagged as a non-resident of Michigan, first, you need a permanent legal residence in another state. Also, you need to ensure that you do not spend 183 days or more in Michigan during a tax year because it will result in you being treated as a Michigan resident for tax purposes. Non-residents are taxed on income earned or received in Michigan. You must file an MI-1040. But this is not applicable if you’re an Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin resident. Then, you’d only file a Michigan state return if you want to claim a refund of any Michigan withholding tax.

Michigan state income tax

Where is My Michigan State Income Tax Refund?

You can find it at the Michigan Department of Treasury ‘Where’s My Refund?’ and can check the status of your Michigan state refund online. But to get access, you must enter your Social Security number (SSN), primary filer’s last name, tax year, filing status, and AGI. Regarding the waiting period, you must wait for two weeks on an e-filed return or six to eight weeks on a paper return before checking the refund status.

Why Did My Michigan State Income Tax Increase?

There are potential reasons that can cause this. Your income may have increased, which could result in a higher tax liability. The tax can also increase if you are not eligible for certain deductions or credits. Additionally, any modifications to your filing status may affect the amount of tax you owe.

Michigan Sales Tax

Michigan, the hub of the US automobile industry, has a sales tax of 6%. But Michigan doesn’t levy sales tax on things considered to be necessities, such as medication, gas, and groceries. However, prepared food is not exempt. Clothing and motor vehicles are taxable. Please note Michigan does apply sales tax to shipping costs. Also, if you buy a physical product outside Michigan to use it in Michigan without being charged the state’s sales tax, then you may have to pay use tax. This tax is a sales tax that you must pay on the total price of the physical product you purchased and would use in Michigan.

In addition, Michigan has specific holidays, like New Year’s Day, Memorial Day, Independence Day, Labor Day, Veterans Day, and Thanksgiving Day, among others, when the state does not charge sales tax. Also, if the holiday falls on Saturday, it is observed on Friday. And if the holiday falls on Sunday, then the holiday gets observed on Monday. So, if you buy something around these holidays, pay by Electronic Funds Transfer (EFT) method one business day before the holiday or weekend. 

Check out Beem to file your tax returns online, for both Federal and State, for any filing status (single or joint) and across all types of tax forms.

5 Things to Know About Michigan Income Tax

  1. Michigan uses a 4.05 % flat-rate income tax system in which filers, regardless of their income, pay the same tax percentage.
  2. Michigan’s residency rules are vital since they identify your tax status. Hence, understanding whether you are a resident, non-resident, or part-year resident plays a significant role in your tax obligations. 
  3. Taxpayers born between 1946 and 1952 can claim their $20,000 deduction against all income.
  4. Determining your adjusted federal gross income (AGI) is essential for calculating Michigan income tax.
  5. The official website of the Michigan Department of Treasury provides an electronic filing option at www.michigan.gov/taxes to streamline the entire process.

FAQs about Michigan State Income Tax

Q. Is Michigan a high-tax state?

It is not. However, the income you earn can play a crucial role. The tax burden varies depending on that and your property holdings.

Q. Is Michigan a tax-friendly state?

Yes, but for retirees. Social security income is not taxed for them, and withdrawals from retirement accounts are partially taxed. However, for other taxpayers, Michigan has various other taxes and fees like vehicle registration and fuel taxes, which impact the overall tax burden.

Q. Is Michigan a good place to live for taxes?

Your financial situation will take a call whether it is a good place to stay or not. And mainly, what your preferences are. The average property tax rate is 1.78%.

Q. How much of my paycheck goes to taxes in Michigan?

This depends on factors like income earned by you, your filing status, the deductions, and if there are any other tax credits. But note that 4.05% of your taxable income will go toward state income taxes, and your employer will withhold that certain amount from your paycheck.

Q. Is Michigan’s tax income earned in another state?

Yes. However, it provides a credit for taxes paid to another state to avoid double taxation of the same income. 

Q. Does the state of Michigan tax social security income?

No. Michigan does not tax social security benefits received by retirees or eligible individuals.

Q. Can Michigan state income tax go up?

Yes. The Michigan Legislature takes a call, and the state income tax can go up through legislative action to suffice budgetary needs and economic conditions.

Q. Do seniors have to pay state income tax in Michigan?

Regardless of age, everyone is subject to the same state income tax laws. However, senior citizens are entitled to certain tax credits and deductions.

Q. Does Michigan have a state income tax for the military?

Yes. But as a Michigan resident, you can exempt your active duty military pay from the state income tax return. 

Q. What are Michigan’s state income taxes for LLCs?

Most LLCs in Michigan are pass-through entities. They don’t pay the state income tax. The owners or the members pay the state income tax on their share of the LLC’s income via their individual income tax returns.

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This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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