Michigan’s state income tax rate is a flat 4.25% on taxable income for 2026, regardless of how much you earn.1Michigan Legislature. Michigan Code 206 – Income Tax Act – Section 206.51 Before the rate applies, you subtract a personal exemption of $5,900 for yourself, your spouse, and each dependent.2State of Michigan Department of Treasury. 2026 Michigan Income Tax Withholding Guide If you live or work in one of 24 Michigan cities, a local income tax stacks on top of the state rate.
How the Flat Rate Works
Michigan does not use graduated brackets. The same 4.25% applies whether your taxable income is $30,000 or $300,000. The rate is calculated on your federal adjusted gross income after Michigan-specific adjustments and after you subtract your exemptions, so it does not apply to every dollar you earn.
The statute includes an automatic trigger that can temporarily lower the rate when general fund revenue grows faster than inflation against a 2020–2021 baseline. That trigger fired once, cutting the rate to 4.05% for the 2023 tax year. It has not fired since, and the rate for 2026 is 4.25%.2State of Michigan Department of Treasury. 2026 Michigan Income Tax Withholding Guide
Personal and Additional Exemptions
The 2026 personal exemption is $5,900 per person.2State of Michigan Department of Treasury. 2026 Michigan Income Tax Withholding Guide A married couple filing jointly with two children shields $23,600 of income from state tax before anything else happens. The Department of Treasury adjusts the figure annually for inflation.
Beyond the standard exemption, Michigan allows additional subtractions for certain household members. For the 2025 tax year, those were $3,400 for each person who is deaf, blind, or totally and permanently disabled, and $500 for each disabled veteran.3Michigan Legislature. Taxpayers Guide These amounts are adjusted each year, so verify the current figures on the MI-1040 instructions when you file.
Local City Income Taxes
Twenty-four Michigan cities charge their own income tax on top of the state’s 4.25%, including Detroit, Grand Rapids, Lansing, Flint, Saginaw, Battle Creek, Jackson, Pontiac, Muskegon, and East Lansing.4State of Michigan Treasury. Which Cities Impose an Income Tax? If you live or work in one of these cities, you owe local tax in addition to your state return.
The standard rate under the City Income Tax Act is 1% for residents and 0.5% for nonresidents who work in the city.5Michigan Legislature. City Income Tax Act – Act 284 of 1964 Detroit is the exception. Under a provision for cities over 600,000, Detroit charges residents 2.4% and nonresidents 1.2%.6City of Detroit. Income Tax Information A Detroit resident earning $60,000 owes $1,440 in city tax alone, before the state’s 4.25% applies. Employers within these cities are required to withhold the local tax from paychecks, so most workers see it deducted automatically.
Retirement Income and Social Security
Michigan taxes retirement income differently depending on when you were born, and this is one of the easier places to make a costly mistake.
If you were born before 1946, your public pension income (state, federal, military) is fully exempt with no dollar cap, and you can deduct private retirement income up to an inflation-adjusted limit. For everyone else, both public and private retirement benefits are deductible only up to that ceiling. In 2025, the limits were $65,897 for single filers and $131,794 for joint filers; the 2026 figures will be slightly higher after the annual adjustment is published.7State of Michigan. Revenue Administrative Bulletin 2026-1 – Individual Income Tax – Treatment of Retirement Income Under Public Act 4 of 2023
Social Security benefits follow a separate rule. Michigan generally allows a deduction for taxable Social Security income, and for tax years 2026 through 2028, a temporary expansion gives taxpayers born after 1952 who have reached age 67 a more generous deduction. During those three years, the Social Security subtraction does not reduce the standard deduction the way it normally would, which effectively produces a larger total tax break.7State of Michigan. Revenue Administrative Bulletin 2026-1 – Individual Income Tax – Treatment of Retirement Income Under Public Act 4 of 2023 That window closes after the 2028 tax year.
Credits That Reduce What You Owe
Michigan Earned Income Tax Credit
If you qualify for the federal Earned Income Tax Credit, Michigan adds a state credit equal to 30% of your federal amount.8Michigan Department of Treasury. Michigan Earned Income Tax Credit for Working Families That expansion from a previous 6% match took effect retroactively starting with the 2022 tax year under Public Act 4 of 2023. The 2025 maximum was $2,414. The credit is refundable, so you receive the money even if your tax liability is zero.
Homestead Property Tax Credit
Homeowners and renters whose total household resources fall below a set threshold can claim a credit for property taxes paid, with a portion of rent treated as property tax. You claim it on Form MI-1040CR. For 2025, the maximum credit was $1,900 and the household-resources limit was $71,500. The 2026 figures have not yet been published but are expected to rise slightly.9State of Michigan. 2025 Michigan Individual Income Tax MI-1040 Instructions This credit alone makes filing worthwhile for many lower-income taxpayers who would otherwise owe nothing.
Who Has to File
You need to file Form MI-1040 if your adjusted gross income exceeds your total personal exemption allowance. Even below that threshold, filing still makes sense if Michigan tax was withheld from your pay or if you qualify for refundable credits like the EITC or Homestead Property Tax Credit.9State of Michigan. 2025 Michigan Individual Income Tax MI-1040 Instructions The deadline for the 2025 return is April 15, 2026.
If you lived in another state but earned Michigan income, or moved into or out of Michigan during the year, you file the same MI-1040 and attach Schedule NR to allocate income between states.3Michigan Legislature. Taxpayers Guide Michigan also has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin, so residents of those states who work in Michigan do not owe Michigan income tax on their wages.10State of Michigan. Withholding Reciprocity Examples
Extensions, Late Penalties, and Interest
If you cannot file by April 15, a federal extension from the IRS automatically extends your Michigan deadline too, with nothing extra to file at the state level.11State of Michigan. Form 4, Instructions for Application for Extension of Time to File Michigan Tax Returns Otherwise, Michigan Form 4 grants a six-month extension for individual returns. An extension to file is not an extension to pay: you must estimate your liability and send payment by April 15, or the extension is denied.
Filing late without an extension costs $10 or 5% of the unpaid tax (whichever is greater) for the first month, plus 5% for each additional month, up to 50% of the tax owed.12Cornell Law School. Michigan Administrative Code R 205.1013 – Failure to File or Pay Penalty Filing on time but not paying triggers a separate penalty: 5% of the unpaid tax for the first two months and 5% for each month after, capped at 25%.13Michigan Legislature. Michigan Code 205 – Section 205.24 Interest accrues on top of the penalties from the original due date; the rate for the first half of 2026 is 8.48% annually and resets every six months.14Michigan Department of Treasury. Interest Rate Due on Underpayments and Overpayments