Michigan Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)
⚠️Informational only — not legal or tax advice.
Tax year covered: 2025 (returns filed in 2026)
Applies to: Income earned January 1 – December 31, 2025
Returns filed: January – April 2026
Last verified: February 16, 2026
Table of Contents
- Quick Reference
- Key Takeaways
- Quick Questions
- Michigan Income Tax Rates and Brackets (2026)
- Statutory Authority
- Who Must File Michigan Income Tax
- What Income Is Taxable in Michigan
- Standard Deduction and Exemptions
- Michigan Income Tax Credits
- Filing Deadlines
- Filing Options for Michigan Income Tax
- Local Income Taxes
- Special Considerations for Michigan Income Tax
- Tax Residency vs Domicile
- Documentation Commonly Requested in Residency Audits
- Multi-State Residency Conflicts
- City Income Tax Withholding for Multi-Location Workers
- Military Personnel
- Retirees
- Students
- Part-Year Residents
- Common Tax Filing Situations
- Forms & Publications
- Penalties and Interest
- Information Verification Log
- Resources
- Where to Check for Updates
- Tax Glossary
- Update History
Quick Reference
Does Michigan have income tax? Yes
Tax structure: Flat
Tax rate: 4.25%
Standard deduction (Single): $20,000 (age 67+)
Standard deduction (Married): $40,000 (age 67+)
Personal exemption: $5,800
Local income tax: Yes – 24 cities levy local income taxes
Official source: https://www.michigan.gov/taxes
Key Takeaways
- Residents: Michigan residents pay Michigan income tax on income from all sources
- Non-residents: Non-residents pay Michigan income tax only on Michigan-source income
- Tax rate: Michigan has a flat 4.25% income tax rate for all income levels
- Local income tax: 24 Michigan cities levy local income taxes ranging from 1.0% to 2.4% for residents (0.5% to 1.2% for non-residents)
- Reciprocity: Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin
- Primary forms: MI-1040 (residents), Schedule NR (non-residents and part-year residents)
Quick Questions About Michigan Income Tax
What is the Michigan income tax rate for 2025? Michigan has a flat income tax rate of 4.25% that applies to all income levels. This rate has been in effect for Tax Year 2025 following an annual calculation that determined no rate reduction was warranted.
Does Michigan have state income tax? Yes, Michigan levies a flat 4.25% income tax on individuals and fiduciaries under the Michigan Income Tax Act.
What are the income tax brackets in Michigan? Michigan does not have tax brackets. The state uses a flat tax structure where all taxable income is taxed at the same 4.25% rate regardless of income level.
Is Social Security taxed in Michigan? No, Michigan does not tax Social Security benefits. Social Security income included in federal adjusted gross income can be fully deducted on the Michigan return.
Does Michigan tax retirement income? Michigan is phasing out taxation of retirement income through Tax Year 2026. The treatment depends on your date of birth and type of retirement income. Military retirement pay, Michigan National Guard pensions, and railroad retirement benefits are fully exempt. For other retirement income, taxpayers born before 1946 receive the most favorable treatment, while those born after 1952 can claim either a standard deduction or retirement subtraction based on their age.
Do I need to file a Michigan income tax return? You must file a Michigan income tax return if you are required to file a federal income tax return, or if your gross income exceeds the personal exemption amount ($5,800 for single filers, $11,600 for joint filers for Tax Year 2025).
Michigan Income Tax Rates and Brackets (2026)
The following tax rate applies to income earned in 2025, reported on tax returns filed in 2026.
| Rate Snapshot | |
|---|---|
| Tax Attribute | Amount/Status |
| Lowest Tax Rate | 4.25% |
| Highest Tax Rate | 4.25% |
| Tax Structure | Flat |
| Number of Brackets | 1 (flat rate) |
| State Income Tax | Yes |
| Local Income Tax | Yes - 24 cities |
| Standard Deduction (Single, age 67+) | $20,000 |
| Standard Deduction (Married Filing Jointly, age 67+) | $40,000 |
| Personal Exemption | $5,800 |
| Stillbirth Exemption | $5,800 |
| Michigan Income Tax Brackets 2026 | |
|---|---|
| Michigan uses a flat tax rate of 4.25% that applies to all filing statuses and all income levels. | |
| All Filing Statuses | |
| Taxable Income | Tax Rate |
| All income | 4.25% |
Filing Statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household
Note: Unlike states with progressive tax brackets, Michigan’s flat tax means that whether you earn $10,000 or $1,000,000, every dollar of taxable income is taxed at the same 4.25% rate.
Source: https://www.michigan.gov/taxes
Michigan Income Tax Rate Calculation Process
Michigan law requires an annual calculation to determine if the income tax rate should be reduced. For each tax year beginning on or after January 1, 2023, the rate may be subject to a formulary reduction if:
- The percentage increase in general fund revenue from the immediately preceding state fiscal year exceeded the inflation rate for the same period, AND
- The inflation rate is positive
The determination is made jointly by the State Treasurer, the Director of the Senate Fiscal Agency, and the Director of the House Fiscal Agency based on financial data from the Annual Comprehensive Financial Report (ACFR).
For Tax Year 2025:
- General fund increased: 5.19%
- Inflation rate: 3.07%
- Result: After applying the statutory formula, no rate reduction was determined for Tax Year 2025
- Rate remains: 4.25%
For Tax Year 2024:
- General fund decreased: -8.33%
- Inflation rate: 5.06%
- Result: Conditions not met for rate reduction
- Rate: 4.25%
For Tax Year 2023:
- Conditions met for rate reduction
- Rate reduced to: 4.05% (one year only)
- Rate returned to 4.25% for Tax Year 2024
Statutory Authority
State income tax in Michigan is authorized under the following legal framework:
Constitutional Authority:
- Michigan Constitution Article IX, Section 7 – Grants the state legislature authority to impose income taxes
- The Michigan Constitution permits both individual and corporate income taxes
Statutory Authority:
- Michigan Income Tax Act, MCL 206.1 et seq. (Public Act 281 of 1967, as amended)
- MCL 206.51 – Establishes the tax rate on individuals and fiduciaries
- MCL 206.30 – Specifies adjustments to federal adjusted gross income, including deductions for retirement income and Social Security benefits
- MCL 206.51(1)(c) – Provides the formula for potential annual rate reductions based on general fund revenue growth and inflation
Administrative Regulations:
- Michigan Administrative Code provisions implementing the Income Tax Act
- Revenue Administrative Bulletins (RABs) issued by the Bureau of Tax Policy
Legislative History:
- Original enactment: 1967 (Public Act 281)
- Major amendment: 2011 (Public Act 38) – Restructured retirement income taxation
- Major amendment: 2015 – Added formulary rate reduction mechanism (effective for 2023 tax year)
- Major amendment: 2023 (Public Act 4) – Modified retirement and pension benefit deductions
- Major amendment: 2025 (Public Act 24) – Modified standard deduction offset requirements for Social Security income (effective Tax Years 2026-2028)
- Current flat rate of 4.25% established: 2012 (reduced from 4.35%)
- Temporary reduction: 4.05% for Tax Year 2023 only
This page compiles information directly from these statutory and regulatory authorities as implemented by the Michigan Department of Treasury.
Source: https://www.legislature.mi.gov/ and https://www.michigan.gov/taxes
Who Must File Michigan Income Tax
Residents
Michigan tax law requires residents to file a state income tax return if:
- A federal income tax return is required, OR
- Gross income exceeds the personal exemption amount:
- Single filers: $5,800 for Tax Year 2025
- Married filing jointly: $11,600 for Tax Year 2025
Michigan Residency Definition: You are a Michigan resident if Michigan is your permanent home—the place you intend to return to whenever you go away. A temporary absence from Michigan, such as spending the winter in a warmer climate, does not change your residency status.
Source: https://www.michigan.gov/taxes
Part-Year Residents
Part-year residents must file a Michigan income tax return if they were a Michigan resident for part of the year and:
- Had income from any source during their period of Michigan residency, OR
- Meet the filing requirements based on their Michigan income
Part-year residents use Schedule NR to allocate income between Michigan and other states.
Form required: MI-1040 with Schedule NR
Source: https://www.michigan.gov/taxes
Non-Residents
Non-residents must file a Michigan income tax return if they had income from Michigan sources during the tax year.
Michigan-source income includes:
- Wages earned while physically working in Michigan
- Business income from Michigan operations
- Rental income from Michigan property
- Income from partnerships or S corporations doing business in Michigan
- Gambling winnings from Michigan casinos, racetracks, or off-track betting facilities
Reciprocal Agreement Exception: Residents of Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin who work in Michigan are generally exempt from Michigan income tax on wages due to reciprocal agreements. These individuals should provide their Michigan employer with a statement of non-residency to avoid withholding.
Form required: MI-1040 with Schedule NR
Source: https://www.michigan.gov/taxes
What Income Is Taxable in Michigan
Michigan taxable income begins with federal adjusted gross income (AGI) and then applies Michigan-specific additions and subtractions.
Fully Taxable Income
The following types of income are generally taxable in Michigan:
- Wages and salaries
- Self-employment income
- Business income
- Investment income (interest, dividends, capital gains)
- Retirement account distributions (401(k), IRA) – subject to age-based deductions
- Rental income
- Gambling and lottery winnings
- Unemployment compensation
- Pension and annuity income – subject to age-based deductions
Source: https://www.michigan.gov/taxes
Social Security Benefits
Michigan does NOT tax Social Security benefits.
Social Security income included in federal adjusted gross income can be fully deducted on the Michigan return through Schedule 1. This includes:
- Social Security retirement benefits
- Social Security disability benefits
- Social Security survivor benefits
Taxpayers born after 1952 who claim the standard deduction must offset the standard deduction by their personal exemption amount. However, Public Act 24 of 2025 provides that for Tax Years 2026 through 2028, these taxpayers do not have to offset the standard deduction by their Social Security deduction.
Military Retirement Pay
Michigan fully exempts military retirement pay from state income tax.
The following military benefits are exempt:
- U.S. Armed Forces retirement and pension benefits
- Michigan National Guard retirement and pension benefits
- Military active duty pay
Source: https://www.michigan.gov/taxes
Railroad Retirement Benefits
Michigan fully exempts railroad retirement benefits from state income tax.
Railroad retirement benefits included in federal adjusted gross income can be fully deducted on the Michigan return.
Pension Income
Michigan’s treatment of pension income depends on the taxpayer’s date of birth and the source of the pension:
Taxpayers born before 1946 (Tier 1):
- All qualifying public pension benefits are exempt
- Qualifying private pension benefits may be deducted up to the annual limit (adjusted for inflation)
Taxpayers born 1946-1952 (Tier 2):
- May claim the Michigan standard deduction ($20,000 single / $40,000 joint) against all income upon reaching age 67
- May alternatively claim a pension deduction if receiving benefits from employment exempt from Social Security
Taxpayers born 1953 and later (Tier 3):
- May claim the Michigan standard deduction upon reaching age 67
- May alternatively claim a retirement subtraction based on specific criteria
- Taxpayers born after 1966 generally cannot deduct private pension benefits
Public Safety Personnel: Certain fire, police, and corrections retirees can exclude retirement benefits received from Michigan service from their taxable income.
Standard Deduction and Exemptions
Personal Exemption (Tax Year 2025)
Michigan allows a personal exemption that reduces taxable income:
- Taxpayer: $5,800
- Spouse (joint return): $5,800
- Each dependent: $5,800
- Stillbirth exemption: $5,800
The personal exemption is available to all taxpayers regardless of age or income level.
Total personal exemptions for joint filers with 2 dependents: $23,200 ($5,800 × 4)
Source: https://www.michigan.gov/taxes
Standard Deduction (For Taxpayers Age 67 and Older)
Michigan offers a standard deduction for taxpayers who have reached age 67, as an alternative to deducting retirement and pension benefits:
For Tax Years 2025 and earlier, and 2029 and later:
- Single / Married Filing Separately: $20,000
- Married Filing Jointly: $40,000
The standard deduction must be reduced by:
- The personal exemption amount claimed
- Deductions for taxable Social Security benefits
- Deductions for railroad retirement benefits
- Deductions for U.S. Armed Forces retirement benefits
- Deductions for Michigan National Guard retirement benefits
For Tax Years 2026-2028 (Public Act 24 of 2025): Michigan taxpayers born after 1952 and aged 67 or older may claim both the standard deduction AND the Social Security deduction without reducing the standard deduction by the Social Security amount. The standard deduction must still be offset by the personal exemption amount.
Age Determination: For married taxpayers filing jointly, eligibility for the standard deduction is based on the age of the older spouse.
Additional Deductions for Employment Exempt from Social Security
Taxpayers who receive retirement benefits from employment with a governmental agency that was exempt from the Social Security Act may be entitled to:
- An additional $15,000 per qualifying spouse for the standard deduction (if certain age and retirement date requirements are met)
- An additional $15,000 increase to the retirement subtraction per qualifying spouse
Common instances of employment exempt from Social Security:
- Police and firefighter retirees (certain jurisdictions)
- Some federal retirees covered under the Civil Service Retirement System and hired prior to 1984
- A small number of other state and local government retirees
Michigan Income Tax Credits
Michigan offers the following tax credits:
1. Michigan Earned Income Tax Credit (EITC)
Michigan’s EITC is set at 30% of the federal Earned Income Tax Credit.
Eligibility: Must qualify for the federal EITC Credit amount: 30% of federal EITC amount Refundable: Yes
For the 2025 tax filing season (Tax Year 2024), the Michigan Department of Treasury issued an average state EITC of $890 to approximately 665,000 recipients. When combined with the average federal EITC of $2,966, eligible families received a total average credit of approximately $3,856.
Source: https://www.michigan.gov/taxes
2. Homestead Property Tax Credit
Michigan offers a refundable property tax credit for homeowners and renters.
Eligibility:
- Own or rent a Michigan homestead
- Meet income requirements
- Property taxes or rent exceed a certain percentage of household income
Source: https://www.michigan.gov/taxes
3. Michigan Education Savings Program (MESP) Deduction
Taxpayers can deduct contributions to Michigan 529 education savings accounts.
Deduction limits:
- Single / Married Filing Separately: $10,000 maximum
- Married Filing Jointly: $20,000 maximum
Source: https://www.michigan.gov/taxes
4. Contributions to the Michigan Education Trust (MET)
Taxpayers may deduct contributions made to the Michigan Education Trust.
Source: https://www.michigan.gov/taxes
5. Credit for Taxes Paid to Another State
Michigan residents who pay income tax to another state on income also taxed by Michigan may claim a non-refundable credit for taxes paid to the other state.
Limitation: Credit cannot exceed the amount of Michigan tax attributable to the income taxed by both states
Form required: Schedule CR (Credit for Tax Paid to Other States)
Source: https://www.michigan.gov/taxes
Filing Deadlines
Regular Deadline
April 15, 2026 for Tax Year 2025 returns
If April 15 falls on a weekend or holiday, the deadline is the next business day.
Source: https://www.michigan.gov/taxes
Extension Deadline
October 15, 2026
Michigan automatically grants a six-month extension if you file for a federal extension. To receive an extension:
- File a federal extension request (IRS Form 4868) by April 15, 2026
- Pay any estimated tax owed by April 15, 2026
- Michigan does not require a separate state extension form
Important: An extension to file is NOT an extension to pay. Any tax owed must be paid by April 15, 2026 to avoid penalties and interest.
Source: https://www.michigan.gov/taxes
Estimated Tax Payments
If you have income not subject to withholding and expect to owe more than $500 when you file your Michigan return, quarterly estimated payments are required.
2026 Quarterly Payment Due Dates (for Tax Year 2025):
- Q1 (January 1 – March 31): April 15, 2026
- Q2 (April 1 – May 31): June 15, 2026
- Q3 (June 1 – August 31): September 15, 2026
- Q4 (September 1 – December 31): January 15, 2027
Safe Harbor Provisions:
You may not have to make estimated payments if you expect your 2025 withholding to be at least:
- 90% of your total 2025 tax, OR
- 100% of your 2024 tax, OR
- 110% of your 2024 tax if your 2024 adjusted gross income exceeded $150,000 ($75,000 for married filing separately)
Form required: MI-1040ES (Michigan Estimated Income Tax for Individuals)
Source: https://www.michigan.gov/taxes
Filing Options for Michigan Income Tax
Online Filing (E-File)
Electronic filing is available through:
- Michigan Treasury eServices: https://www.michigan.gov/taxes (free state e-file)
- MIFastFile: https://www.mifastfile.org (free for many taxpayers)
- IRS-Approved Tax Software: TurboTax, H&R Block, TaxAct, and other software that supports Michigan returns
Benefits of e-filing:
- Faster refund processing (typically 4 weeks vs. 8 weeks for paper)
- Immediate confirmation of receipt
- Fewer errors due to built-in error checking
- Direct deposit available for refunds
In 2024, Michigan taxpayers e-filed more than 91% of all returns.
Source: https://www.michigan.gov/taxes
Paper Filing
Paper forms are available for download and mail filing:
Primary Forms:
- MI-1040: Michigan Individual Income Tax Return
- Schedule 1: Additions and Subtractions
- Schedule NR: Nonresident and Part-Year Resident Schedule
Download Location: https://www.michigan.gov/taxes/iit-forms
Mailing Address:
With payment: Michigan Department of Treasury
P.O. Box 30774
Lansing, MI 48909
Without payment (refund or no balance due): Michigan Department of Treasury
P.O. Box 30774
Lansing, MI 48909
Important: Do not attach your payment to the return. Place both items loose in the envelope.
Source: https://www.michigan.gov/taxes
Tax Preparer Options
Licensed tax professionals familiar with Michigan tax law include:
- CPA (Certified Public Accountant)
- Enrolled Agent (EA)
- Tax Attorney
Free Tax Assistance:
Taxpayers with low to moderate income, disabilities, or who are 60 years of age or older may qualify for free tax preparation help from IRS-certified volunteers through:
- VITA (Volunteer Income Tax Assistance): Call 2-1-1 or visit https://irs.treasury.gov/freetaxprep
- TCE (Tax Counseling for the Elderly): Call 2-1-1
- AARP Tax-Aide: Visit https://www.aarp.org/money/taxes/aarp_taxaide/
- Michigan Free Tax Help: https://www.michiganfreetaxhelp.org
Source: https://www.michigan.gov/taxes
Local Income Taxes
Michigan allows cities to levy local income taxes under Public Act 284 of 1964 (the City Income Tax Act). Currently, 24 Michigan cities have local income taxes in addition to the state income tax.
How Michigan City Income Taxes Work
Two-Tier Rate Structure:
- Residents: Pay the full city income tax rate
- Non-residents who work in the city: Pay half the resident rate
Tax Base: City income taxes are calculated on the same income base as the Michigan state return (federal adjusted gross income with Michigan modifications).
Withholding Requirement: Employers located in or doing business in a city with income tax must withhold the appropriate city tax from employee wages.
Source: https://www.michigan.gov/taxes/citytax
Cities with Income Tax (2025)
Michigan has 24 cities that levy local income taxes:
Standard Rate Cities (1.0% Residents / 0.5% Non-Residents)
The following cities levy a 1.0% tax on residents and 0.5% on non-residents:
- Albion
- Battle Creek
- Benton Harbor
- Big Rapids
- East Lansing
- Flint
- Grayling
- Hamtramck
- Hudson
- Ionia
- Jackson
- Lansing
- Lapeer
- Muskegon
- Muskegon Heights
- Pontiac
- Port Huron
- Portland
- Springfield
- Walker
Higher Rate Cities
Detroit:
- Residents: 2.4%
- Non-residents: 1.2%
Grand Rapids:
- Residents: 1.5%
- Non-residents: 0.75%
Highland Park:
- Residents: 2.0%
- Non-residents: 1.0%
Saginaw:
- Residents: 1.5%
- Non-residents: 0.75%
Source: https://www.michigan.gov/taxes/citytax and local city ordinances
City of Detroit Income Tax
The Michigan Department of Treasury administers the City of Detroit individual income tax under a partnership that began in 2015.
Tax Rates (2025):
- Detroit Residents: 2.4%
- Non-Residents working in Detroit: 1.2%
Filing Requirements:
Residents: File Form 5118 (City of Detroit Resident Income Tax Return) if:
- You lived in Detroit at any time during 2025, AND
- Your gross income exceeds the exemption allowance
Non-Residents: File Form 5119 (City of Detroit Nonresident Income Tax Return) if:
- You worked in Detroit during 2025 but did not live there, AND
- You earned income from Detroit sources
Part-Year Residents: File Form 5120 (City of Detroit Part-Year Resident Income Tax Return) if you moved to or from Detroit during 2025.
Filing Deadline: April 15, 2026 (same as federal and state deadlines)
Where to File: Detroit returns can be e-filed or mailed. The Michigan Department of Treasury processes all Detroit individual income tax returns.
Payment Options:
- eCheck (free) at https://www.michigan.gov/citytax
- Debit or credit card (fees apply)
- Check by mail
Source: https://www.michigan.gov/taxes/citytax/detroit/individual
Credit for Taxes Paid to Another Michigan City
If you pay income tax to more than one Michigan city (for example, you live in one city with income tax and work in another), you may be eligible for a credit.
Credit Limitation: The credit generally cannot exceed one-half of one percent (0.5%)
Documentation Required: You must attach page 1 of the other city’s income tax return to claim the credit.
Source: Local city income tax ordinances and instructions
Important Notes on City Income Taxes
Geographic Boundaries Matter: City income tax is based on actual city limits, not ZIP codes or mailing addresses. An employee who lives just outside city boundaries does not owe resident city tax, even if they have a city mailing address.
No County Income Taxes: Unlike some states, Michigan does not permit counties to levy income taxes. Only incorporated cities may do so under state law.
Employer Responsibilities: Employers must:
- Determine employee residence and work location
- Withhold appropriate city taxes based on whether the employee lives and/or works in a taxing city
- File separate city withholding returns for each city where they have employees
- Issue W-2s showing city tax withheld
Source: https://www.michigan.gov/taxes
Special Considerations for Michigan Income Tax
Remote Workers and Multi-State Taxation
Living in Michigan, Working for Out-of-State Employer
As a Michigan resident, you owe Michigan income tax on ALL income, regardless of where your employer is located.
What this means:
- Employer location does NOT determine tax obligation
- Income from employers in other states is fully taxable in Michigan
- You must report all income on your Michigan return
- You may owe tax to the state where you physically perform work
Example: A Michigan resident working remotely for a California company from their Michigan home owes Michigan income tax on that income. If they never physically work in California, they do not owe California income tax.
Multi-State Filing: If you physically work in another state (even remotely), you may need to:
- File a non-resident return in the work state
- File a resident return in Michigan reporting all income
- Claim a credit on your Michigan return (Schedule CR) for taxes paid to the other state
Reciprocal Agreement Exception: If you work in Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin, you generally do not owe tax to that state due to reciprocal agreements (see Reciprocal Agreements section below).
Source: https://www.michigan.gov/taxes
Working in Michigan, Living in Another State
Non-residents who perform work IN Michigan owe Michigan income tax on income earned from Michigan sources.
Physical Presence Rule: Income is sourced to Michigan based on where work is physically performed. If you work remotely from another state for a Michigan employer, that income is generally not Michigan-source income.
Michigan-Source Income for Non-Residents:
- Wages for work physically performed in Michigan
- Business income from Michigan business operations
- Rental income from Michigan property
- Income from partnerships or S corporations doing business in Michigan
Reciprocal Agreement Exception: If you are a resident of Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin and work in Michigan, you generally do not owe Michigan tax on wages due to the reciprocal agreement.
Form Required: MI-1040 with Schedule NR
Source: https://www.michigan.gov/taxes
⚠️ Interstate Tax Risk Indicator
Remote workers involving Michigan commonly encounter dual taxation complications with specific states:
Working with these states requires careful planning:
- New York – Applies “convenience of the employer” rule; may tax Michigan residents working remotely for NY employers
- California – Aggressive residency audits for extended work periods; may challenge residency claims
- Pennsylvania – Complex local income tax structure with over 200 taxing jurisdictions
- Connecticut – Complex credit system for taxes paid to other states
- Massachusetts – Telecommuter taxation rules can affect Michigan residents working for MA employers
Key Consideration: Michigan does NOT apply a “convenience of the employer” rule. Michigan taxes based on physical presence – where the work is actually performed.
Source: https://www.michigan.gov/taxes and IRS Publication 505
“Convenience of the Employer” Rule
Michigan does NOT apply a “convenience of the employer” rule.
Non-residents are taxed only on income from work physically performed in Michigan. If a non-resident works remotely from their home state for a Michigan employer, that income is NOT subject to Michigan tax.
What this means for Michigan employers:
- No Michigan withholding required for out-of-state remote workers (unless they physically work in Michigan)
- Exception: Temporary work assignments in Michigan may require withholding
What this means for Michigan residents:
- Michigan residents working remotely for employers in states that DO apply convenience rules (such as New York) may face taxation by both Michigan and the other state
- Credit for taxes paid to other states available on Schedule CR
Source: https://www.michigan.gov/taxes
Reciprocal Agreements
Michigan has reciprocal agreements with the following states:
- Illinois
- Indiana
- Kentucky
- Minnesota
- Ohio
- Wisconsin
What reciprocity means:
Under these agreements, residents of reciprocal states pay income tax only to their state of residence, not to the state where they work.
For Michigan residents working in reciprocal states:
- No tax owed to Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin on wage income
- The reciprocal state should not withhold its income tax
- All income remains taxable to Michigan
- File only a Michigan resident return
For reciprocal state residents working in Michigan:
- No Michigan income tax owed on wages earned in Michigan
- Michigan employers should not withhold Michigan income tax if the employee provides proper documentation
- Income remains taxable to the employee’s home state
- No Michigan return required if no other Michigan-source income exists
Employee Documentation Required:
To avoid withholding, the employee must provide the employer with:
- A signed and dated statement containing:
- Employee’s name
- Legal address (in the reciprocal state)
- Social Security number
- Statement that the address provided is the employee’s legal residence
Michigan does not provide an official non-residency certificate form. Employers may create their own form or accept a letter containing the required information.
Important Limitations:
Reciprocal agreements typically apply only to:
- Wages, salaries, tips, and commissions
- Income from personal services
They do NOT apply to:
- Business income
- Rental income
- Investment income
- Gambling winnings
Example: An Ohio resident who works in Michigan and also owns rental property in Michigan would:
- NOT owe Michigan tax on wages (due to reciprocity)
- WOULD owe Michigan tax on rental income
- Must file MI-1040 with Schedule NR reporting only the rental income
Source: https://www.michigan.gov/taxes and Revenue Administrative Bulletin 2017-13
Multi-State Tax Filing
When earning income in multiple states, Michigan residents typically must:
- File a resident return in Michigan (MI-1040) reporting all income from all sources
- File non-resident returns in other states where income was earned and taxed
- Claim a credit on the Michigan return for taxes paid to other states
Credit for Taxes Paid to Other States:
Michigan allows a non-refundable credit for income taxes paid to another state on income also taxed by Michigan.
Form required: Schedule CR (Credit for Taxes Paid to Other States)
Credit Calculation: The credit is limited to the lesser of:
- The actual tax paid to the other state, OR
- The amount of Michigan tax attributable to the income taxed by both states
Example: A Michigan resident earns $60,000 in wages from Michigan employment and $40,000 from work physically performed in Illinois.
- Files Michigan resident return reporting all $100,000
- Files Illinois non-resident return reporting $40,000 Illinois-source income
- Wait – Illinois has a reciprocal agreement with Michigan, so actually NO Illinois return or tax is required
- Better example: Works in Pennsylvania instead:
- Files Michigan resident return reporting all $100,000
- Files Pennsylvania non-resident return reporting $40,000 PA income
- Claims credit on Michigan Schedule CR for PA tax paid on the $40,000
Source: https://www.michigan.gov/taxes
Tax Residency vs Domicile
Understanding the difference between residency and domicile is critical for determining Michigan tax obligations.
Domicile Defined
Domicile is your permanent legal home—the place where you intend to return and remain indefinitely.
Key characteristics:
- You can have only ONE domicile at a time
- Domicile continues until you establish a new domicile elsewhere with intent to remain permanently
- Temporary absences do not change domicile
- Intent to return is critical
Factors establishing Michigan domicile:
- Where you maintain your principal residence
- Where you are registered to vote
- Where you hold a driver’s license
- Where you register vehicles
- Where your family (spouse and minor children) reside
- Where you maintain bank accounts and safe deposit boxes
- Where you belong to clubs and religious organizations
- Where you maintain professional licenses
- Stated domicile in legal documents (will, trust documents)
- Location of personal property and valuable items
Source: Michigan Income Tax Act and Michigan Department of Treasury guidance
Residency Defined
Residency for Michigan tax purposes is simpler than in many states. Michigan primarily uses a domicile-based definition rather than a statutory day-count test.
You are a Michigan resident if:
- Michigan is your permanent home (domicile), regardless of time spent in the state
Michigan does NOT have:
- A 183-day rule for establishing statutory residency
- A bright-line day-count test for tax residency
This is different from states like New York or California that can assert residency based solely on physical presence exceeding a certain number of days.
Temporary Absence: A temporary absence from Michigan, such as:
- Spending winters in a warmer climate
- Working temporarily in another state
- Attending school in another state
does NOT change your Michigan residency status if you maintain Michigan as your domicile and intend to return.
Source: https://www.michigan.gov/taxes
| Critical Differences | ||
|---|---|---|
| Factor | Domicile | Tax Residency (Michigan) |
| Definition | Permanent legal home | Based primarily on domicile |
| Number allowed | One at a time | One state |
| Based on | Intent + connections | Domicile |
| Day count test | Not applicable | Not used in Michigan |
| Changes when | Establish new permanent home with intent | Change domicile to another state |
| Tax impact | State of domicile taxes all income | Michigan taxes all income if MI domicile |
Common Scenarios
Scenario 1: Snowbirds
- Domicile: Michigan (permanent home, family, voting, driver’s license)
- Winter residence: Florida (November – March each year)
- Tax result: Remain Michigan resident; all income taxable to Michigan
- Florida: No state income tax, so no conflict
Scenario 2: Temporary Work Assignment
- Domicile: Michigan (permanent home where family lives)
- Work assignment: Texas (9 months, rented apartment)
- Tax result: Remain Michigan resident; all income taxable to Michigan
- Texas: No state income tax, so no conflict
Scenario 3: Student at Out-of-State University
- Domicile: Michigan (parents’ home, where student intends to return)
- School location: Illinois (temporary for educational purposes)
- Tax result: Remain Michigan resident for entire year
- Illinois wages: Exempt from Illinois tax due to reciprocal agreement
Source: https://www.michigan.gov/taxes
Changing Michigan Domicile
To change your domicile FROM Michigan to another state, you must:
- Physically move to the new state
- Abandon Michigan domicile with no intent to return
- Establish the new state as your permanent home with intent to remain indefinitely
- Take affirmative steps showing the change:
- Obtain driver’s license in new state
- Register to vote in new state
- Register vehicles in new state
- Change address on bank accounts, insurance policies
- Move family to new state
- Sell or rent Michigan home
- File homestead exemption in new state
- Update estate planning documents
- Join clubs/organizations in new state
Burden of Proof: If Michigan claims you are still a resident and you dispute it, the burden typically falls on the taxpayer to prove the domicile change.
Part-Year Resident Filing: In the year you change domicile:
- File as a part-year resident using MI-1040 with Schedule NR
- Report all income earned while a Michigan resident
- Allocate income between Michigan and the new state based on when earned
Source: https://www.michigan.gov/taxes
Documentation Commonly Requested in Residency Audits
Michigan Department of Treasury may audit residency determinations. The following documentation types are commonly requested:
| Primary Residency Evidence | |
|---|---|
| Document Type | What It Shows |
| Driver's License | State of legal residence |
| Voter Registration | Where you exercise voting rights |
| Vehicle Registration | Where vehicles are domiciled |
| Professional Licenses | State of professional domicile |
| Homestead Property Tax Exemption | Primary residence claim |
| Physical Presence Documentation | |
|---|---|
| Document Type | What It Shows |
| Day-Count Logs | Physical location by day (if relevant) |
| Travel Records | Interstate travel patterns |
| Credit Card Statements | Geographic spending patterns |
| Cell Phone Records | Location data from carrier |
| E-ZPass / Toll Records | State line crossings |
| Utility Bills | Physical occupancy patterns |
| Property and Financial Ties | |
|---|---|
| Document Type | What It Shows |
| Property Ownership | Real estate holdings |
| Homestead Exemption | Primary residence claim |
| Lease Agreements | Rental property locations |
| Bank Statements | Financial institution location |
| Safe Deposit Box Location | Where valuables are kept |
| Social and Family Connections | |
|---|---|
| Document Type | What It Shows |
| Family Location | Where spouse/children reside |
| Medical Records | Where you receive regular care |
| Dental Records | Ongoing care location |
| Religious Affiliation | Place of worship attendance |
| Club Memberships | Social/recreational ties |
| School Records | Where children attend school |
| Employment Documentation | |
|---|---|
| Document Type | What It Shows |
| W-2 Forms | Employer location, work state |
| Employment Contract | Work location requirements |
| Remote Work Agreement | Authorization to work remotely |
| Office Location | Physical workspace location |
| Intent Documentation | |
|---|---|
| Document Type | What It Shows |
| Will/Estate Documents | Stated domicile for estate purposes |
| Trust Documents | Domicile declarations |
| Tax Returns | Prior year residency claims |
| Insurance Policies | Address on file with insurers |
| Voter Registration History | Pattern of voting participation |
Common Audit Triggers
Common patterns that may trigger Michigan residency audits:
- Claiming non-residency while maintaining Michigan driver’s license
- Owning property in Michigan while filing as non-resident
- Spouse/children residing in Michigan while taxpayer claims other domicile
- High-income individuals claiming non-residency
- Claiming non-residency immediately after retiring
- Maintaining multiple homes without clear primary residence
- Professional or business licenses maintained in Michigan
Burden of Proof
In residency disputes, the burden typically falls on the taxpayer to prove:
- Michigan domicile was abandoned
- New domicile was established in another state
- Intent to remain permanently in the new state
Documentation Strategy: Maintain contemporaneous records showing:
- When you were physically in each state (calendar/log)
- Why you were in each location (work, vacation, etc.)
- Where your permanent home is located
- Steps taken to establish or change domicile
Source: Michigan Department of Treasury audit procedures
Multi-State Residency Conflicts
Unlike states with statutory residency tests, Michigan’s domicile-based approach reduces the risk of dual residency conflicts. However, conflicts can still occur.
Potential Conflict Scenarios
Michigan (domicile-based) + Statutory Residency State:
A person could potentially be:
- A Michigan resident by domicile, AND
- A statutory resident of another state by physical presence
Example:
- Maintains Michigan domicile (family, home, voting)
- Works in New York, maintains NYC apartment
- Present in New York 200+ days per year
- Result: Both Michigan (by domicile) and New York (by statutory presence) could claim the person as a resident
Resolution
If claimed as resident by two states:
- File returns in both states reporting all income
- Claim credit on domicile state (Michigan) return for taxes paid to statutory resident state
- May require professional tax assistance
- Consider formally changing domicile if primarily living in the other state
Dispute Process: If you disagree with Michigan’s residency determination:
- File the return as non-resident or part-year resident
- Provide detailed explanation and documentation
- May require audit and appeal process
- Burden of proof is on taxpayer
Source: https://www.michigan.gov/taxes
City Income Tax Withholding for Multi-Location Workers
Special Complexity: Workers who live and work in different Michigan cities with income taxes face unique withholding situations.
Common Scenarios
Scenario 1: Live in City A (with income tax), Work in City B (with income tax)
- Employer withholds City B non-resident tax (0.5% typically)
- Employee owes City A resident tax (1.0% typically)
- Employee claims credit for City B tax paid (limited to 0.5%)
- Net additional tax owed to City A: 0.5%
Scenario 2: Live in Detroit, Work in Grand Rapids
- Employer withholds Grand Rapids non-resident tax: 0.75%
- Employee owes Detroit resident tax: 2.4%
- Employee claims credit (maximum 0.5%)
- Net additional tax owed to Detroit: 1.9%
Scenario 3: Remote Worker – Live in City with Tax, Work from Home
- If employer is in city without income tax: Only resident city tax applies
- If employer is in city with income tax but employee works from home: Generally only resident city tax applies
- City income tax is based on where work is physically performed
Source: Local city income tax ordinances
Military Personnel
Servicemembers Civil Relief Act (SCRA)
Active duty military members stationed in Michigan due to military orders:
- Do NOT become Michigan residents solely due to military orders
- Maintain their state of legal residence (domicile)
- Do NOT pay Michigan income tax on military pay if Michigan is not their state of legal residence
- Are not subject to Michigan income tax on military compensation
Key Principle: Military orders alone do not establish Michigan residency. Servicemembers maintain their home state residency for tax purposes unless they take affirmative steps to change their legal domicile to Michigan.
Source: Servicemembers Civil Relief Act, 50 USC § 4001 et seq.
Military Spouses Residency Relief Act (MSRRA)
Spouses of active duty military members can maintain their home state residency and are not taxed by Michigan on income earned in Michigan if ALL of the following conditions are met:
- The spouse is in Michigan solely to be with the servicemember
- The servicemember is in Michigan under military orders
- The spouse maintains domicile in another state
What this means:
- Military spouse’s wages earned in Michigan are NOT subject to Michigan income tax
- Spouse continues to file as a resident in their home state
- Michigan employers should not withhold Michigan income tax if spouse provides proper documentation
Documentation Required: The military spouse should provide the Michigan employer with:
- Copy of servicemember’s military orders
- Statement of non-residency
- Proof of legal residence in another state
Source: Veterans Benefits and Transition Act of 2018, Public Law 115-407
Michigan Military Retirement Pay Treatment
Michigan fully exempts military retirement pay from state income tax.
The following military benefits are completely exempt from Michigan income tax:
- U.S. Armed Forces retirement and pension benefits
- Michigan National Guard retirement and pension benefits
- Military active duty pay (for non-residents stationed in Michigan under orders)
How to claim the exemption: Military retirees deduct their military retirement income on Schedule 1 (Additions and Subtractions) when filing the MI-1040.
No age restriction: Unlike some states, Michigan does not impose age restrictions on the military retirement exemption. The exemption applies regardless of the retiree’s age.
No income limitation: There is no cap or income limitation on the amount of military retirement pay that can be excluded.
Source: https://www.michigan.gov/taxes and MCL 206.30(1)(f)
What Military Members DO Owe Tax On
Military members who ARE Michigan residents (domicile in Michigan) owe Michigan income tax on:
Taxable Income:
- Non-military income earned in Michigan:
- Civilian wages
- Self-employment income
- Business income
- Investment income:
- Interest
- Dividends
- Capital gains
- Rental income from Michigan property
- Other taxable income not specifically exempt
Example: A Michigan-domiciled servicemember stationed in California receives:
- $50,000 military pay (exempt)
- $10,000 rental income from Michigan property (taxable)
- $5,000 investment income (taxable)
The servicemember:
- Files a Michigan resident return (MI-1040)
- Deducts the $50,000 military pay on Schedule 1
- Reports and pays tax on $15,000 ($10,000 + $5,000)
Source: https://www.michigan.gov/taxes
Establishing or Changing Military Domicile
To establish Michigan as your domicile (for favorable tax treatment after retirement):
Servicemembers stationed in Michigan who wish to change their domicile TO Michigan should:
- Declare Michigan as home of record with military
- Obtain Michigan driver’s license
- Register to vote in Michigan
- Register vehicles in Michigan
- File Michigan tax returns as a resident
- Purchase property in Michigan (if possible)
- Update legal documents (will, power of attorney) to reflect Michigan domicile
To maintain a non-Michigan domicile while stationed in Michigan:
- Keep driver’s license in home state
- Maintain voter registration in home state
- File tax returns in home state as resident
- Register vehicles in home state
- Maintain intent to return to home state after service
Why domicile matters: After retirement, military retirees who are Michigan residents can:
- Exclude all military retirement pay from Michigan income tax
- This exemption continues for life regardless of age
Source: https://www.michigan.gov/taxes
Michigan National Guard
Michigan National Guard retirement and pension benefits are fully exempt from Michigan income tax.
This exemption applies to:
- Retirement pay from Michigan National Guard service
- Pension benefits from Michigan National Guard service
Members of the Michigan National Guard who also served in the U.S. Armed Forces may have benefits from both sources—all such military retirement income is exempt in Michigan.
Source: MCL 206.30(1)(f)
Federal Tax Rules for Military Personnel
While Michigan exempts military retirement pay, military servicemembers should be aware that:
- Military retirement pay IS taxable for federal income tax purposes
- Combat zone pay is exempt from federal income tax (with some limitations for officers)
- Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) are not taxable
Source: IRS Publication 3, Armed Forces’ Tax Guide
Retirees
Michigan has been phasing out taxation of retirement income. The treatment depends primarily on the taxpayer’s date of birth.
Social Security Benefits
Michigan does NOT tax Social Security benefits.
All Social Security benefits are fully deductible on the Michigan return:
- Social Security retirement benefits
- Social Security disability benefits
- Social Security survivor benefits
How to claim the deduction: Social Security income included in federal adjusted gross income is deducted on Schedule 1 (line 9 for Tax Year 2025).
No income limitation: There is no income cap on the Social Security exemption. All Social Security benefits are exempt regardless of total income.
Special Rule for Tax Years 2026-2028: Public Act 24 of 2025 allows Michigan taxpayers born after 1952 and aged 67 or older to claim both the standard deduction AND the Social Security deduction for Tax Years 2026 through 2028, without reducing the standard deduction by the Social Security amount. The standard deduction must still be offset by the personal exemption amount.
Pension Income – Tier Structure
Michigan’s treatment of pension and retirement income is based on a “tier system” determined by the taxpayer’s date of birth.
Tier 1: Born Before 1946
Most favorable treatment
Public Pensions:
- All qualifying public pension and retirement benefits are FULLY EXEMPT
- No dollar limitation
- No age requirement
Private Pensions:
- May deduct up to the annual limit (adjusted for inflation each year)
- 2025 Limits:
- Single / Married Filing Separately: $54,404 (estimated)
- Married Filing Jointly: $108,808 (estimated)
Tier 2: Born 1946-1952
Two Options – Choose Most Beneficial
Option A: Standard Deduction (upon reaching age 67)
- Single / Married Filing Separately: $20,000
- Married Filing Jointly: $40,000
- Applies against ALL income (not just retirement income)
- Must reduce by personal exemption and certain other deductions
Option B: Pension Deduction (if receiving benefits from employment exempt from Social Security)
- Available to taxpayers who receive qualifying pension or retirement benefits from employment with a governmental agency that was exempt from Social Security
- Examples: police, firefighters, some federal civil service retirees hired before 1984
Source: https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/retirement-and-pension-benefits
Tier 3: Born 1953 or Later
Treatment varies by specific birth year
Born 1953-1958: Upon reaching age 67, may claim:
- Standard Deduction:
- Single / Married Filing Separately: $20,000
- Married Filing Jointly: $40,000
- Applies against all income
- Must reduce by personal exemption and certain other deductions
Born 1959-1966:
- Phase-in subtraction available starting at age 67
- Amount is a percentage of private pension limits (currently 75% for those born 1946-1966)
- OR standard deduction if more beneficial
Born after 1966:
- Generally CANNOT deduct private pension benefits
- May claim standard deduction upon reaching age 67
- May qualify for specific exemptions if receiving benefits from employment exempt from Social Security
Public Safety Exemption: Certain fire, police, and corrections retirees can exclude retirement benefits received from Michigan service from their taxable income, regardless of birth year tier.
Public Pension vs Private Pension
Public Pension (favorable treatment for those born before 1946): Includes retirement benefits from:
- Federal government employment
- State government employment
- Local government employment (cities, counties, schools, etc.)
- Public universities and community colleges
Private Pension (subject to dollar limitations): Includes retirement benefits from:
- Private sector employers
- Self-employed retirement plans
- Most defined contribution plans (401(k), 403(b))
- IRAs
Source: https://www.michigan.gov/taxes
Retirement Account Distributions
401(k) and Traditional IRA Distributions:
- Treated as pension income
- Subject to age-based tier rules described above
- Taxable at federal level, treatment in Michigan depends on taxpayer’s birth year
Roth IRA Distributions:
- Qualified distributions are not included in federal AGI
- Not taxable in Michigan (because not in federal AGI)
Required Minimum Distributions (RMDs):
- Subject to same rules as other retirement distributions
- Tier-based treatment applies
Source: https://www.michigan.gov/taxes
Employment Exempt from Social Security
Taxpayers who receive retirement benefits from employment with a governmental agency that was exempt from the Social Security Act may be entitled to additional benefits.
Additional Standard Deduction Amount:
- An additional $15,000 per qualifying spouse for the standard deduction (if certain age and retirement date requirements are met)
Enhanced Retirement Subtraction:
- An additional $15,000 increase to the retirement subtraction per qualifying spouse
Common Instances of Employment Exempt from Social Security:
- Police and firefighter retirees (certain jurisdictions)
- Some federal retirees covered under the Civil Service Retirement System and hired prior to 1984
- Some state and local government retirees
Note: Almost all employment today IS covered by Social Security. The most common instances are police, firefighters, and certain federal civil service retirees hired before 1984.
Choosing Between Standard Deduction and Retirement Subtraction
For taxpayers who qualify for both options, Michigan law allows you to choose the most beneficial treatment.
Factors to Consider:
- Total retirement income: If retirement income exceeds standard deduction, the retirement subtraction might be better
- Age: Standard deduction only available at age 67+
- Type of income: Standard deduction applies to ALL income; retirement subtraction only to qualifying retirement income
- Social Security benefits: Consider interaction with Social Security deduction
Estimator Tool: Michigan Department of Treasury provides an online estimator to help determine the most beneficial option: https://www.michigan.gov/taxes/iit/tools
Source: https://www.michigan.gov/taxes
Railroad Retirement Benefits
Michigan fully exempts railroad retirement benefits from state income tax.
Railroad retirement benefits included in federal adjusted gross income can be fully deducted on the Michigan return on Schedule 1.
Source: MCL 206.30(1)(f)
Public Safety Retirees
Special exemption for certain public safety retirees:
As of Tax Year 2023, certain fire, police, and corrections retirees can exclude retirement benefits received from Michigan service from their taxable income.
Eligibility: The exemption applies to retirement and pension benefits received by:
- Retired police officers
- Retired firefighters
- Retired corrections officers
Who received retirement benefits due to service with:
- Michigan state agencies
- Michigan local government units
Scope: This exemption applies regardless of the retiree’s birth year tier and is in addition to other available deductions.
Surviving Spouse Rules
Special rules apply for surviving spouses:
A surviving spouse who has reached age 67, has not remarried, and claimed a subtraction for retirement and pension benefits on a return jointly filed with the decedent in the year they died may elect to:
Take the retirement and pension benefits subtraction based on the older deceased spouse’s year of birth, subject to the limits available for a single filer, instead of their own standard deduction.
This allows the surviving spouse to potentially maintain more favorable tax treatment based on the deceased spouse’s birth year.
Students
College students attending school in Michigan do NOT automatically become Michigan residents for tax purposes.
Student Residency Rules
You remain a non-resident if:
- You maintain legal residence (domicile) in another state
- Your presence in Michigan is temporary for educational purposes
- You intend to return to your home state after graduation
- You do not take affirmative steps to establish Michigan domicile
You owe Michigan tax only on Michigan-source income:
- Wages earned from working in Michigan
- Business income from Michigan sources
- Other income from Michigan sources
Scholarships and fellowships:
- Generally not taxable if used for qualified education expenses (tuition, fees, books)
- Amounts used for room, board, or other non-qualified expenses may be taxable
Source: https://www.michigan.gov/taxes
Out-of-State Students Attending Michigan Schools
Example: An Ohio resident attends the University of Michigan and works part-time at a campus bookstore.
Tax obligations:
- Remains an Ohio resident (domicile unchanged)
- Owes Michigan income tax on Michigan wages from bookstore job
- Files MI-1040 with Schedule NR reporting only Michigan wages
- Also files Ohio resident return reporting all income
- Claims credit on Ohio return for Michigan tax paid
Exception for reciprocal state residents: If the student is from Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin, wages earned in Michigan are exempt from Michigan tax due to reciprocal agreements.
Revised example: The Ohio student:
- Does NOT owe Michigan tax on wages (reciprocal agreement)
- Provides employer with non-residency statement
- Files only Ohio resident return
- No Michigan return required if no other Michigan income
Source: https://www.michigan.gov/taxes
Michigan Students Attending Out-of-State Schools
Example: A Michigan resident attends college in Illinois.
Tax obligations:
- Remains a Michigan resident (domicile unchanged)
- Michigan taxes ALL income regardless of source
- Files Michigan resident return (MI-1040) reporting all income
Working in Illinois: If the student works in Illinois:
- Illinois does NOT tax the wages (reciprocal agreement)
- Student provides Illinois employer with non-residency statement
- All income taxable only to Michigan
Working in non-reciprocal state: If a Michigan student works in a non-reciprocal state (e.g., Massachusetts):
- Owes tax to both Michigan and Massachusetts
- Files Massachusetts non-resident return for wages earned there
- Files Michigan resident return reporting all income
- Claims credit on Michigan return for Massachusetts tax paid
Source: https://www.michigan.gov/taxes
Establishing Michigan Residency as a Student
Students CAN become Michigan residents if they take affirmative steps to establish domicile:
Actions that establish Michigan domicile:
- Register to vote in Michigan
- Obtain Michigan driver’s license
- Register vehicles in Michigan
- Purchase property in Michigan
- Accept full-time employment in Michigan (not temporary student employment)
- Remain in Michigan after graduation
- Move family to Michigan
- Declare intent to remain in Michigan permanently
Note: Simply attending school in Michigan and having a part-time job does NOT establish Michigan domicile if you intend to return to your home state after graduation.
Source: https://www.michigan.gov/taxes
Student Loan Interest Deduction
Federal deduction flows through to Michigan:
The student loan interest deduction available on the federal return is incorporated into federal adjusted gross income, which is the starting point for the Michigan return.
Michigan does not have a separate state-level student loan interest deduction beyond what is allowed federally.
Source: https://www.michigan.gov/taxes
Part-Year Residents
If you moved TO or FROM Michigan during 2025, you must file as a part-year resident.
Income Allocation
Part-year residents must allocate income between:
- Period of Michigan residency: All income from all sources is taxable
- Period of non-residency: Only Michigan-source income is taxable
Key Principle: Part-year residents are taxed like residents while they are Michigan residents, and like non-residents for the period they were not Michigan residents.
Form required: MI-1040 with Schedule NR
Source: https://www.michigan.gov/taxes
Moving TO Michigan
If you moved to Michigan during 2025 and established domicile:
Determine residency start date: The date you establish Michigan domicile (not just the moving date)
Report on Michigan return:
- All income from all sources earned from residency date through December 31
- Only Michigan-source income earned before residency date (if any)
Report on former state’s return:
- Check former state’s requirements
- Many states require part-year resident return
- Report income earned while resident of that state
Example: Illinois resident moves to Michigan on July 1, 2025, and establishes Michigan domicile.
Michigan return (MI-1040 with Schedule NR):
- Report all income from July 1 – December 31 (worldwide income)
- Report any Michigan-source income from January 1 – June 30 (if any)
Illinois return:
- File Illinois part-year resident return
- Report income earned January 1 – June 30 while Illinois resident
Source: https://www.michigan.gov/taxes
Moving FROM Michigan
If you moved from Michigan during 2025 and established domicile in another state:
Determine residency end date: The date you establish domicile in the new state
Report on Michigan return:
- All income from all sources earned from January 1 through residency end date
- Use MI-1040 with Schedule NR
Report on new state’s return:
- File part-year or full-year resident return in new state
- Report income as required by new state’s law
- Many states tax all income from date of establishing residency
Example: Michigan resident moves to Florida on September 1, 2025, and establishes Florida domicile.
Michigan return (MI-1040 with Schedule NR):
- Report all income from January 1 – August 31 (worldwide income)
Florida return:
- No return required (Florida has no state income tax)
Source: https://www.michigan.gov/taxes
Completing Schedule NR
Part-year residents use Schedule NR (Nonresident and Part-Year Resident Schedule) to allocate income.
Schedule NR has three columns:
- Column A: Total Income (from all sources, all periods)
- Column B: Michigan Income (income while Michigan resident + Michigan-source income while non-resident)
- Column C: Other State(s) Income (income while resident of other state(s), excluding Michigan-source)
Column allocation:
- Enter total income for the entire year in Column A
- Allocate to Column B:
- All income (from anywhere) earned while a Michigan resident
- Michigan-source income earned while a non-resident
- Allocate to Column C:
- Income earned while a resident of another state
- Exclude any Michigan-source income already in Column B
Personal Exemptions: Part-year residents calculate a prorated personal exemption based on the percentage of the year they were Michigan residents.
Source: https://www.michigan.gov/taxes
Common Part-Year Resident Scenarios
Scenario 1: Retired and moved to Florida
- Michigan resident through March 31
- Moved to Florida April 1
- Received pension income throughout the year
Tax treatment:
- Pension income for January-March: Fully taxable to Michigan (and deductible based on birth year tier)
- Pension income for April-December: Not taxable to Michigan or Florida (FL has no income tax)
Scenario 2: Accepted job in Michigan, moved from Texas
- Texas resident through June 30
- Michigan resident from July 1
- Received wages throughout the year
Tax treatment:
- Wages January-June (Texas employment): Not taxable to Michigan or Texas
- Wages July-December (Michigan employment): Taxable to Michigan
- File MI-1040 with Schedule NR
Scenario 3: Student graduated, moved from Michigan to New York for job
- Michigan resident through May 31
- New York resident from June 1
- Received wages throughout year
Tax treatment:
- Wages January-May: Taxable to Michigan (all income as resident)
- Wages June-December (NY employment): Taxable to New York only
- File Michigan part-year resident return (MI-1040 with Schedule NR)
- File New York part-year resident return
Proving Date of Residency Change
Documentation to establish when domicile changed:
- Lease or home purchase agreement in new state
- Utility account setup dates
- Driver’s license application date
- Vehicle registration date
- Voter registration date
- Employment start date
- Moving company receipts
- Travel records
Burden of proof: The taxpayer must prove when Michigan domicile ended and when new domicile was established.
Source: Michigan Department of Treasury
Proration of Standard Deduction and Personal Exemption
Personal Exemption: Part-year residents prorate the personal exemption based on the percentage of the year they were Michigan residents.
Formula: (Number of months as Michigan resident / 12) × Personal exemption amount
Example: Part-year resident for 8 months:
- Personal exemption: $5,800
- Prorated exemption: (8/12) × $5,800 = $3,867
Standard Deduction (Age 67+): Part-year residents who qualify for the standard deduction also prorate it based on the period of Michigan residency.
Source: https://www.michigan.gov/taxes
Common Tax Filing Situations
These are factual clarifications based on official Michigan guidance and tax law.
Situation: “My employer is in another state, so I don’t owe Michigan tax”
Michigan law: Michigan residents owe tax on ALL income regardless of where the employer is located. Employer location does not determine tax obligation.
If you are a Michigan resident, all of your income from all sources (Michigan and non-Michigan) is taxable to Michigan.
Source: https://www.michigan.gov/taxes
Situation: “I work remotely full-time, so I don’t owe tax anywhere”
Tax law principle: All income is taxable in at least one jurisdiction. Remote work does not exempt income from taxation.
- If you are a Michigan resident working remotely, Michigan taxes your income
- If you physically work in another state, that state may also tax the income
- You may claim credit for taxes paid to another state on your Michigan return
Source: https://www.michigan.gov/taxes
Situation: “I’m a part-year resident, so I owe half the tax”
Michigan law: Part-year residents owe tax only on income earned during their Michigan residency period, not a simple 50% reduction of total income.
The calculation uses Schedule NR to allocate income based on when and where it was earned, not a flat percentage reduction.
Source: https://www.michigan.gov/taxes
Situation: “I spent 4 months in Michigan, so I’m a part-year resident”
Michigan law: Physical presence alone does not determine residency. Residency is based on domicile—where your permanent home is located.
Spending time in Michigan (e.g., winter home, extended visit) does not make you a Michigan resident if you maintain domicile in another state.
Source: https://www.michigan.gov/taxes
Situation: “I’m retired, so I don’t have to file a Michigan return”
Filing requirement: Retired individuals must file if they meet the general filing requirements, regardless of the source of their income.
You must file if:
- You are required to file a federal return, OR
- Your gross income exceeds the personal exemption amount
Many retirees can exclude most or all of their income through available deductions, but they still must file a return to claim those deductions.
Source: https://www.michigan.gov/taxes
Situation: “I claimed Michigan as my resident state in the military, so I have to file there even though I moved”
Domicile principle: Military designation of home of record does not permanently establish domicile.
After military service, you can establish domicile in any state, including states where you were never previously domiciled. Your military home of record designation does not control post-service residency.
Source: https://www.michigan.gov/taxes
Forms & Publications
Primary Tax Return Forms
Resident Return
Form MI-1040: Michigan Individual Income Tax Return
- Purpose: Used by Michigan residents to report all income from all sources
- Instructions: Included in MI-1040 Booklet
- Download: https://www.michigan.gov/taxes/iit-forms/2025-individual-income-tax-forms
- Page Count: Main form is 2 pages
- Required Attachments: Federal Form 1040, W-2s, 1099s, supporting schedules
Non-Resident/Part-Year Resident Return
Form MI-1040 with Schedule NR
- Purpose: Used by non-residents and part-year residents to allocate income
- Schedule NR: Required attachment showing income allocation between Michigan and other states
- Instructions: Included in Schedule NR instructions
- Download: https://www.michigan.gov/taxes/iit-forms/2025-individual-income-tax-forms
Common Schedules and Attachments
Schedule 1: Additions and Subtractions
- Purpose: Report additions to and subtractions from federal adjusted gross income
- Common uses:
- Social Security deduction
- Retirement income subtraction
- Michigan Education Savings Program deduction
- State and local tax addback
- Unemployment compensation subtraction
Schedule NR: Nonresident and Part-Year Resident Schedule
- Purpose: Allocate income between Michigan and other states
- Required for: Non-residents and part-year residents
- Key feature: Three-column allocation (Total, Michigan, Other States)
Schedule W: Exemption Allowance Worksheet
- Purpose: Calculate total exemption allowance
- Includes: Personal exemptions, dependency exemptions, stillbirth exemption
Form 4884: Michigan Pension Schedule
- Purpose: Calculate retirement and pension benefit deduction
- Used by: Taxpayers claiming retirement subtraction instead of standard deduction
Schedule CR: Credit for Taxes Paid to Other States
- Purpose: Claim credit for income taxes paid to other states
- Required for: Michigan residents who paid tax to other states on income also taxed by Michigan
MI-1040H: Michigan Schedule of Apportionment
- Purpose: Apportion business income for taxpayers with multi-state operations
Source: https://www.michigan.gov/taxes/iit-forms
Withholding Forms
MI-W4: Employee’s Michigan Withholding Exemption Certificate
- Purpose: Employee claims withholding exemptions
- Similar to: Federal Form W-4
- When required: At hire and when exemptions change
- Download: https://www.michigan.gov/taxes/business-taxes/withholding
MI-W4P: Withholding Certificate for Michigan Pension or Annuity Payments
- Purpose: Recipients of pension/annuity payments specify withholding
- Download: https://www.michigan.gov/taxes/business-taxes/withholding
Form 446: Michigan Income Tax Withholding Guide
- Purpose: Comprehensive guide for employers
- Includes: Withholding tables, requirements, filing instructions
- Download: https://www.michigan.gov/taxes/business-taxes/withholding
Source: https://www.michigan.gov/taxes
Estimated Tax Forms
MI-1040ES: Michigan Estimated Income Tax for Individuals
- Purpose: Make quarterly estimated tax payments
- Payment vouchers: Four vouchers for each quarter
- Download: https://www.michigan.gov/taxes/iit-forms
Quarterly Due Dates:
- 1st Quarter: April 15
- 2nd Quarter: June 15
- 3rd Quarter: September 15
- 4th Quarter: January 15 (of following year)
MI-1041ES: Michigan Estimated Income Tax for Fiduciary and Composite Filers
- Purpose: Estates, trusts, and composite filers make estimated payments
- Download: https://www.michigan.gov/taxes
Source: https://www.michigan.gov/taxes
Payment Forms
MI-1040-V: Michigan Individual Income Tax Payment Voucher
- Purpose: Submit payment when not filing return electronically
- Use when: Making payment after filing return, or paying separately from return
- Important: Do NOT use for estimated payments
- Download: https://www.michigan.gov/taxes/iit-forms
Form 5094: Sales, Use and Withholding Payment Voucher
- Purpose: Employer withholding tax payments
- Download: https://www.michigan.gov/taxes/business-taxes/withholding
Source: https://www.michigan.gov/taxes
City of Detroit Tax Forms
Form 5118: City of Detroit Resident Income Tax Return
- Purpose: Detroit residents report all income
- Tax rate: 2.4%
- Download: https://www.michigan.gov/taxes/citytax/detroit/forms
Form 5119: City of Detroit Nonresident Income Tax Return
- Purpose: Non-residents working in Detroit report Detroit-source income
- Tax rate: 1.2%
- Download: https://www.michigan.gov/taxes/citytax/detroit/forms
Form 5120: City of Detroit Part-Year Resident Income Tax Return
- Purpose: Individuals who moved to/from Detroit during the year
- Download: https://www.michigan.gov/taxes/citytax/detroit/forms
Form 5313: City of Detroit Instruction Booklet
- Purpose: Comprehensive instructions for all Detroit city tax forms
- Download: https://www.michigan.gov/taxes/citytax/detroit/forms
Source: https://www.michigan.gov/taxes/citytax
Amendment Forms
MI-1040X: Amended Michigan Individual Income Tax Return
- Purpose: Correct or change a previously filed Michigan return
- When to use: Discovered error, received corrected W-2/1099, IRS audit adjustment
- Deadline: Generally 4 years from original due date
- Download: https://www.michigan.gov/taxes/iit-forms
Important: Attach explanation of changes and supporting documentation
Source: https://www.michigan.gov/taxes
Special Forms
MI-1310: Claim for Refund Due a Deceased Taxpayer
- Purpose: Claim refund on behalf of deceased taxpayer
- Who files: Personal representative, surviving spouse, or claimant
- Download: https://www.michigan.gov/taxes/iit-forms
Form 2848: Power of Attorney
- Purpose: Authorize representative to act on taxpayer’s behalf
- Download: https://www.michigan.gov/taxes
Source: https://www.michigan.gov/taxes
Key Publications
Revenue Administrative Bulletin 2026-1: Retirement and Pension Benefits
- Content: Comprehensive guidance on retirement income taxation following PA 4 of 2023 and PA 24 of 2025
- Key topics:
- Tier structure for pension deductions
- Standard deduction rules
- Public safety retiree exemptions
- Surviving spouse provisions
- Social Security deduction interaction
- Download: https://www.michigan.gov/taxes/rep-legal/rab/2026-revenue-administrative-bulletins/revenue-administrative-bulletin-2026-1
Revenue Administrative Bulletin 2017-13: Reciprocal Agreements
- Content: Explains reciprocal income tax agreements with neighboring states
- States covered: Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin
- Download: https://www.michigan.gov/taxes/rep-legal/rab
Michigan Individual Income Tax Guide
- Content: General overview of Michigan income tax for individuals
- Availability: Integrated into MI-1040 Instructions Booklet
Retirement and Pension Estimator
- Purpose: Interactive tool to help taxpayers determine best retirement income deduction option
- Access: https://www.michigan.gov/taxes/iit/tools
Source: https://www.michigan.gov/taxes
Where to Submit Paper Returns
Michigan Individual Income Tax Returns
With Payment: Michigan Department of Treasury
P.O. Box 30774
Lansing, MI 48909
Without Payment (Refund or No Balance Due): Michigan Department of Treasury
P.O. Box 30774
Lansing, MI 48909
Important Filing Notes:
- Do not attach payment to return
- Place both items loose in envelope
- Include all required schedules and forms
- Attach copies of all W-2s and 1099s
- Sign and date the return
Source: https://www.michigan.gov/taxes
City of Detroit Individual Income Tax Returns
With Payment: State of Michigan
P.O. Box 30738
Lansing, MI 48909
Without Payment: State of Michigan
P.O. Box 30738
Lansing, MI 48909
Make checks payable to: “State of Michigan – Detroit”
Penalties and Interest
Late Filing Penalty
Michigan imposes a penalty for filing a return after the due date (including extensions).
Penalty: 25% of the tax due, with a minimum penalty of $25
Source: MCL 206.545
Late Payment Penalty
Michigan imposes a penalty for failing to pay tax by the due date.
Penalty: 10% of the tax due, with a minimum penalty of $10 (if payment is made within 60 days of due date)
Additional penalty: If payment is made more than 60 days after the due date, an additional 10% penalty applies
Source: MCL 206.545
Interest on Unpaid Tax
Interest accrues on unpaid tax from the due date until paid.
Interest rate: 1% above the prime rate, compounded monthly
Rate adjustment: The interest rate is adjusted on July 1 and January 1 of each year
Source: MCL 206.545
Underpayment of Estimated Tax Penalty
If you fail to make required estimated payments or underpay in any quarter:
Penalty for failure to make estimated payments: 25% of the tax due, with a minimum of $25
Penalty for underpayment or late payment of estimates: 10% of the underpayment, with a minimum of $10
Exceptions (Safe Harbor): No penalty applies if estimated payments total at least:
- 90% of the current year’s tax liability, OR
- 100% of the prior year’s tax liability (110% if prior year AGI exceeded $150,000)
Special rules for farmers, fishermen, and seafarers:
- Must pay 66⅔% of current year’s tax through estimates
- May make single payment by January 15 following the tax year
Source: https://www.michigan.gov/taxes
Information Verification Log
| Information Type | Source | Last Verified |
|---|---|---|
| Tax rate (4.25%) | https://www.michigan.gov/treasury/reference/taxpayer-notices/2025-tax-year-income-tax-rate-for-individuals-and-fiduciaries | February 16, 2026 |
| Personal exemption ($5,800) | https://www.michigan.gov/taxes | February 16, 2026 |
| Standard deduction amounts | https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/retirement-and-pension-benefits | February 16, 2026 |
| Filing deadlines | https://www.michigan.gov/taxes/iit | February 16, 2026 |
| Local income tax information | https://www.michigan.gov/taxes/citytax | February 16, 2026 |
| Reciprocity agreements | https://www.michigan.gov/taxes | February 16, 2026 |
| Retirement income treatment | https://www.michigan.gov/taxes/rep-legal/rab/2026-revenue-administrative-bulletins/revenue-administrative-bulletin-2026-1 | February 16, 2026 |
Official Michigan Income Tax Resources
All information on this page is compiled exclusively from official government sources.
Michigan Department of Treasury
Main Website: https://www.michigan.gov/treasury
Individual Income Tax: https://www.michigan.gov/taxes/iit
Tax Forms: https://www.michigan.gov/taxes/iit-forms
Tax Guidance: https://www.michigan.gov/taxes/iit/tax-guidance
Frequently Asked Questions: https://www.michigan.gov/taxes/questions
Michigan Treasury eServices: https://www.michigan.gov/taxes
- File returns online
- Make payments
- Check refund status
- View tax records
- Respond to letters
MIFastFile (Free E-File): https://www.mifastfile.org
Contact Information
Michigan Department of Treasury
General Individual Income Tax Inquiries: Phone: 517-636-4486
Hours: Monday-Friday, 8:00 AM – 5:00 PM ET
TTY (Hearing Impaired): Michigan Relay Service: Dial 711
Mailing Address: Michigan Department of Treasury
P.O. Box 30774
Lansing, MI 48909
Physical Address: Michigan Department of Treasury
430 West Allegan Street
Lansing, MI 48922
City of Detroit Income Tax
Website: https://www.michigan.gov/taxes/citytax/detroit/individual
Phone: 517-636-5829
Email Inquiries: Use online contact form at https://www.michigan.gov/taxes
Michigan Tax Code and Regulations
Michigan Income Tax Act: MCL 206.1 et seq.
https://www.legislature.mi.gov/ (Search for “MCL 206”)
Revenue Administrative Bulletins: https://www.michigan.gov/taxes/rep-legal/rab
Michigan Legislature: https://www.legislature.mi.gov/
Legislative Service Bureau: https://www.legislature.mi.gov/documents/publications/manual.pdf
Free Tax Assistance
VITA (Volunteer Income Tax Assistance)
- Free tax help for low-to-moderate income taxpayers
- Find locations: Call 2-1-1 or visit https://irs.treasury.gov/freetaxprep
- Eligibility: Generally income under $67,000
TCE (Tax Counseling for the Elderly)
- Free tax help for taxpayers age 60 and older
- Specializes in pension and retirement issues
- Find locations: Call 2-1-1
AARP Tax-Aide
- Free tax preparation for low-to-moderate income taxpayers (focus on 50+)
- Find locations: https://www.aarp.org/money/taxes/aarp_taxaide/
- Hours: January through April 15
Michigan Free Tax Help
- Statewide directory of free tax assistance programs
- Website: https://www.michiganfreetaxhelp.org
Source: https://www.michigan.gov/taxes
IRS Resources (Federal)
IRS Michigan Page: https://www.irs.gov/businesses/small-businesses-self-employed/michigan
IRS General Information: Phone: 1-800-829-1040
Website: https://www.irs.gov
IRS Publications Relevant to Michigan Taxpayers:
- Publication 17: Your Federal Income Tax
- Publication 505: Tax Withholding and Estimated Tax
- Publication 521: Moving Expenses (for understanding residency changes)
- Publication 3: Armed Forces’ Tax Guide
Where to Check for Updates
Current Tax Information
Michigan Department of Treasury Main Tax Page: https://www.michigan.gov/taxes
Individual Income Tax Specific: https://www.michigan.gov/taxes/iit
Tax Year 2025 Guidance: https://www.michigan.gov/taxes/iit/tax-guidance/tax-year-info/tax-year-2025-guidance
Annual Updates
Tax Rate Announcements:
- Published annually (typically February/March)
- Announces rate for upcoming tax year
- Found at: https://www.michigan.gov/treasury/reference/taxpayer-notices
2025 Tax Rate Announcement: https://www.michigan.gov/treasury/reference/taxpayer-notices/2025-tax-year-income-tax-rate-for-individuals-and-fiduciaries
Personal Exemption Amounts:
- Updated annually for inflation
- Published with tax year guidance
- For 2025: $5,800
Retirement Income Limits:
- Updated annually for inflation
- Published in Revenue Administrative Bulletins
- Found at: https://www.michigan.gov/taxes/rep-legal/rab
Legislative Changes
Michigan Legislature Tax Committee:
- Senate Finance Committee: https://www.senate.michigan.gov/committee/finance
- House Tax Policy Committee: https://www.legislature.mi.gov/
Recent Major Legislation:
- Public Act 4 of 2023: Restructured retirement income taxation
- Public Act 24 of 2025: Modified standard deduction offset for Social Security (Tax Years 2026-2028)
Bill Tracking: https://www.legislature.mi.gov/
Administrative Guidance
Revenue Administrative Bulletins (RABs): https://www.michigan.gov/taxes/rep-legal/rab
Taxpayer Notices: https://www.michigan.gov/treasury/reference/taxpayer-notices
Frequently Asked Questions: https://www.michigan.gov/taxes/questions
Forms Updates
Current Tax Year Forms: https://www.michigan.gov/taxes/iit-forms/2025-individual-income-tax-forms
Form Availability:
- Most current year forms available starting late December
- Prior year forms available for 4+ years
- Forms updated for legislative changes
Email Subscription
Treasury Email Updates: Michigan Department of Treasury offers email updates for tax professionals and taxpayers.
Subscribe at: https://www.michigan.gov/taxes (Look for “Subscribe” or “Email Updates” link)
Updates include:
- Tax rate changes
- Legislative updates
- Form releases
- Filing season information
- Important deadlines
Social Media and News
Michigan Treasury News: https://www.michigan.gov/treasury/news
Press Releases:
- Tax rate announcements
- Filing season information
- Legislative changes
- Important taxpayer notices
Note: This page will be reviewed and updated in January 2027 for Tax Year 2026. For real-time updates, always consult the official Michigan Department of Treasury website at https://www.michigan.gov/taxes.
Tax Glossary
Adjusted Gross Income (AGI): Total income minus specific deductions (e.g., IRA contributions, student loan interest). For Michigan, tax calculation begins with federal AGI.
Domicile: Your permanent legal home—the place you intend to return to indefinitely. You can have only one domicile at a time. Critical for determining Michigan residency.
Exemption Allowance: Amount subtracted from income to determine taxable income. Michigan allows $5,800 per exemption for Tax Year 2025.
Filing Status: Category determining how tax is calculated. Options: Single, Married Filing Jointly, Married Filing Separately, Head of Household. Same as federal filing status.
Flat Tax: Tax system where all income is taxed at the same rate regardless of income level. Michigan has a flat 4.25% rate.
Michigan-Source Income: Income earned from Michigan sources. For non-residents, only Michigan-source income is taxable to Michigan. Includes wages earned in Michigan, rental income from Michigan property, business income from Michigan operations.
Non-Resident: Individual who does not maintain domicile in Michigan but earns income from Michigan sources.
Part-Year Resident: Individual who moved into or out of Michigan during the tax year, changing domicile.
Personal Exemption: Fixed dollar amount ($5,800 for 2025) that reduces taxable income. Allowed for taxpayer, spouse, and each dependent.
Reciprocity (Reciprocal Agreement): Agreement between states where residents working across state lines pay tax only to their state of residence. Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin.
Resident: Individual who maintains domicile in Michigan. Michigan residents pay tax on all income from all sources, regardless of where earned.
Standard Deduction (Michigan): Deduction available to taxpayers age 67+ as alternative to retirement income subtraction. $20,000 single / $40,000 married filing jointly for Tax Year 2025.
Statutory Residency: Some states impose residency based on physical presence (e.g., 183+ days). Michigan does NOT use statutory residency—Michigan residency is based solely on domicile.
Tax Credit: Dollar-for-dollar reduction in tax owed. Example: $500 credit reduces tax by $500. Michigan’s main credit is the Earned Income Tax Credit (30% of federal EITC).
Tax Deduction: Reduces taxable income. Example: $500 deduction reduces taxable income by $500, saving approximately $21.25 at Michigan’s 4.25% rate.
Taxable Income: Income subject to tax after subtracting exemptions and deductions. Michigan tax = Taxable Income × 4.25%.
Tier Structure: Michigan’s system for determining retirement income treatment based on taxpayer’s date of birth. Tier 1 (born before 1946), Tier 2 (born 1946-1952), Tier 3 (born 1953+).
Withholding: Tax deducted from paycheck by employer and sent to the state on employee’s behalf. Michigan withholding rate is 4.25% after exemptions.
Update History
This section documents all material changes to Michigan income tax information on this page.
February 2026 – Initial Publication
- Published comprehensive Michigan income tax guide for Tax Year 2025
- Verified all information from official Michigan Department of Treasury sources
- Tax rate: 4.25% (confirmed May 1, 2025)
- Personal exemption: $5,800
- Standard deduction: $20,000 single / $40,000 joint (age 67+)
- All forms and links verified functional as of February 16, 2026
Anticipated Future Updates
May 2026 – Tax Rate Determination for Tax Year 2026:
- Michigan Department of Treasury will announce whether the income tax rate changes for Tax Year 2026
- Announcement typically made early May following release of state fiscal year ACFR
- Rate determination based on general fund revenue growth vs. inflation
December 2026 – Tax Year 2026 Forms Release:
- Forms for Tax Year 2026 (filed in 2027) typically released late December
- Personal exemption amount updated for inflation
- Retirement income limits updated for inflation
January 2027 – Annual Update:
- Full review of all content for Tax Year 2026
- Update tax rates and brackets
- Update personal exemption amounts
- Update standard deduction amounts
- Update retirement income limits
- Verify all links and sources
Recent Legislative Changes Affecting Michigan Income Tax
Public Act 24 of 2025 (Effective Tax Years 2026-2028):
- Modified standard deduction offset requirements for taxpayers born after 1952 who receive Social Security benefits
- These taxpayers may claim both standard deduction AND Social Security deduction for Tax Years 2026-2028
- Standard deduction still offset by personal exemption amount
- Change expires after Tax Year 2028 unless extended by legislature
Public Act 4 of 2023:
- Restructured retirement and pension benefit taxation
- Modified tier structure for pension deductions
- Created special exemptions for public safety retirees
- Phased-in changes to School Aid Fund earmarks
Public Act 216 of 2024:
- Amended Flow-Through Entity Tax provisions
- Does not directly impact individual income tax but affects business owners
Verification Schedule
Annual Full Review: January of each year
- Verify current tax rates
- Update all dollar amounts (exemptions, deductions, limits)
- Review all forms and publications
- Check all links for functionality
- Incorporate any legislative changes
Mid-Year Legislative Review: June of each year
- Review any bills passed during legislative session
- Update for emergency legislation or significant changes
- Monitor Revenue Administrative Bulletins
Quarterly Link Verification: Every three months
- Verify all michigan.gov URLs remain functional
- Update any changed URLs
- Check for new forms or publications
Continuous Monitoring:
- Tax rate announcements
- Emergency legislation
- Disaster relief provisions
- Revenue Administrative Bulletins
Last comprehensive update: February 16, 2026
Next scheduled review: May 2026 (Tax Year 2026 rate announcement)
Next major update: January 2027 (Tax Year 2026 comprehensive update)
Source Verification Date: February 16, 2026
All information on this page has been verified against official Michigan Department of Treasury publications and the Michigan Compiled Laws. Users should always consult official sources for the most current information, as tax laws and regulations can change.
Primary Sources Used:
- Michigan Department of Treasury: https://www.michigan.gov/taxes
- Michigan Compiled Laws: https://www.legislature.mi.gov/
- Revenue Administrative Bulletins: https://www.michigan.gov/taxes/rep-legal/rab
- Taxpayer Notices: https://www.michigan.gov/treasury/reference/taxpayer-notices