Michigan State Taxes
Quick Tax Facts
Income Tax: 4.05%
State Sales Tax: 6%
Median Property Tax: $2,145
Overview
Michigan (the Great Lakes state) is known for its natural beauty, reasonable cost of living, and friendly people. In a recent study, Ann Arbor, home to the University of Michigan, was even named the best place to live in America (2023). Unfortunately, it’s not so friendly when it comes to taxing its residents. Michigan’s property tax rates are above average and its flat tax can mean higher taxes for middle-class and lower-income families.
Michigan Income Tax
Michigan has always used a flat income tax rate. When the income tax was first introduced in 1968, the rate was 2.6%. Over the next six decades, the rate fluctuated between 2.6% and 6.35% (1983). It remained at 4.6% from 1986 through 1993, after which it began to decrease. Since 2013, Michigan’s flat income tax rate has been 4.25%, but it was reduced to 4.05% for the 2023 tax year.
In addition to the state income tax, some cities also levy a local income tax ranging between .5% and 2.4%.
Who Must File?
Full-year residents of Michigan must file a state income tax return (MI-1040) if they file a federal return or their income exceeds the Michigan exemption allowance. For the 2022 tax year, the personal and dependent exemption is $5,400 plus $2,900 for each eligible special exemption. Full-year residents must file a return, even if they do not owe Michigan tax.
Part-Year & Non-Residents
Part-year and non-residents must file if they have income earned while residing in Michigan and/or attributable to Michigan. Non-residents who are not required to file a federal tax return may still be required to file a Michigan income tax return if their income exceeds the prorated exemption allowance.
Non-residents who live in a reciprocal state (Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin) must file a return to claim a refund of any Michigan tax withheld from their wages. Part-year and non-residents are generally required to submit Form MI-1040, Schedule 1, Schedule NR, and Schedule W.
Michigan Sales Tax
Michigan has a state sales tax rate of 6% for retail sales. Electricity, gas (natural and artificial), as well as home heating fuels (residential use), are taxed at 4%. Michigan does not allow cities or local governments to impose a sales tax.
Michigan Property Taxes
Many are surprised at how high the property tax rates are for Michigan. The state is in the top ten most expensive when the tax amount is based on the percentage of property value or a percentage of a resident’s income. The median amount paid, however, falls more in the middle due to the price of housing being lower than in other areas of the country.
The median property tax paid in Michigan is $2,145 (based on a home value of $132,200). Washtenaw County has the highest property tax at an average of $3,913. The lowest amount is $739 in Luce County.
| Highest | $3913 |
|---|---|
| Median | $2145 |
| Lowest | $739 |
Yearly Cost Per Resident
Michigan Tax Holidays
There are no tax holidays scheduled in Michigan at this time.
Michigan Tax Resources
If you need assistance preparing your Michigan state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.
You can also visit the Michigan Department of Treasury website for additional resources.
- Pay Taxes Online
- Where’s My Refund?
- Tax Forms and Instructions
- Filing Options
- Taxpayer Assistance: 517-636-4486
