Taxes in Michigan: State Tax Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Taxes in Michigan: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Michigan keeps its income tax simple with a flat rate of 4.25%, making it one of the more straightforward state tax systems in the country. However, a handful of cities — including Detroit, Grand Rapids, and Flint — levy their own local income taxes, an unusual feature that adds complexity for residents and commuters. Property taxes tend to run above the national average, and a generous homestead exemption creates a significant gap between how primary residences and other properties are taxed.
Michigan Income Tax Rates (2026)
Michigan imposes a flat-rate income tax:
| Tax Rate | Taxable Income Range |
|---|---|
| 4.25% | All taxable income |
The rate applies equally to all filing statuses and income levels. Michigan briefly lowered the rate to ~4.05% for tax year 2023 under a trigger mechanism, but the rate reverted to 4.25%.
Michigan offers a personal exemption of ~$5,600 per taxpayer and dependent. There is no standard deduction; instead the personal exemption serves a similar role.
Local income taxes: 24 Michigan cities levy their own income taxes. Detroit’s rate is 2.40% for residents and 1.20% for nonresidents who work in the city. Other cities typically charge 1.00% for residents and 0.50% for nonresidents.
Sales Tax
| Component | Rate |
|---|---|
| State rate | 6.00% |
| Local add-on | None |
| Combined rate statewide | 6.00% |
Michigan does not permit local sales tax add-ons, keeping the rate uniform at 6.00%.
Exempt from sales tax: Groceries (food for home preparation), prescription medications, newspapers, and residential utility usage up to certain thresholds.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.38% |
| National average | 0.99% |
| Rank | Among the 10 highest nationally |
Michigan property taxes are above average. The state uses two key values: State Equalized Value (SEV), which is 50% of market value, and taxable value, which cannot increase more than the rate of inflation or 5% per year (whichever is lower) under Proposal A (1994).
Homestead exemption: Owner-occupied primary residences are exempt from the 18-mill school operating tax, which can reduce the effective rate by approximately 0.30%–0.40%. Non-homestead properties (second homes, rentals, commercial) pay the full millage.
Example: A home with a market value of $250,000 and a taxable value of $110,000 (long-term owner) in a typical suburb might pay ~$3,500 per year if homesteaded, compared to ~$4,500 for the same property without the homestead exemption.
Other Taxes
- Estate and inheritance tax: Michigan does not impose a state estate tax or inheritance tax.
- Capital gains: Taxed as ordinary income at the flat 4.25% rate.
- Use tax: 6.00%, applied to out-of-state purchases where sales tax was not collected.
- Fuel tax: ~$0.302 per gallon of gasoline.
- Cigarette tax: ~$2.00 per pack.
- Cannabis tax: 10% excise tax on recreational marijuana sales, in addition to the 6% sales tax.
- Registration tax: Annual vehicle registration fees are based on the vehicle’s MSRP and model year.
Tax Breaks and Credits
- Homestead property tax credit: Renters and homeowners with household income below ~$63,000 can claim a credit on their state return. Homeowners claim the credit based on property taxes exceeding 3.2% of household income. Renters use 20% of rent paid as the property tax equivalent.
- Home heating credit: Low-income households can receive a credit for heating costs.
- Retirement income: Michigan’s treatment of retirement income depends on birth year. Taxpayers born before 1946 can exempt all pension and retirement income. Those born 1946–1952 can exempt up to ~$56,961 (single) or ~$113,922 (joint). Those born after 1952 receive a more limited deduction.
- Michigan EITC: ~6% of the federal Earned Income Tax Credit.
- Farmland preservation credit: Farmers whose property taxes exceed 3.5% of household income can claim the excess as a credit.
- Disabled veterans exemption: Property tax exemption for 100% disabled veterans.
Key Takeaways
- Michigan’s flat 4.25% income tax is simple, but local income taxes in 24 cities (up to 2.40% in Detroit) add a layer of complexity
- Property taxes average ~1.38%, well above the national average, though the homestead exemption provides significant relief for primary residences
- Sales tax is a uniform 6.00% statewide with no local add-ons
- Retirement income tax treatment varies dramatically by birth year — a critical factor for retirees
- No state estate or inheritance tax applies
Next Steps
- Compare Michigan to other states at State Income Tax Comparison: All 50 States Ranked
- Understand your federal obligation with the Federal Income Tax Guide 2026
- Make sure you claim everything you can — Tax Deductions You’re Probably Missing
- Ready to file? See How to File Your Taxes Step by Step
Tax information is for educational purposes only. Consult a licensed tax professional.