State & Local Taxes

Michigan State Income Tax: 2026 Rate and Rules

By The Ledgerism Editorial Team · The Ledgerism Brief Editorial Team produces original, methodology-disclosed accounting and tax research—data trackers, databases, and reference guides built to be the most-cited source in the field. Every figure is verified against primary sources including FASB, the IRS, the PCAOB, NASBA, the AICPA, and state boards of accountancy.

Michigan state income tax is a flat 4.25% on nearly all taxable income for the 2026 tax year, with no brackets. On top of that, 24 Michigan cities levy their own income tax, and a 2023 law finishes phasing out the tax on most retirement income in 2026. What you actually owe depends on your residency, your exemptions, and whether you live or work in a taxing city.

Michigan is one of a shrinking group of flat-tax states. The single rate applies to residents, part-year residents, and nonresidents alike, though the base each group is taxed on differs. This guide covers the rate, the personal exemption, city income taxes, the retirement-income phase-in, and the residency rules that decide which return you file.

Michigan’s 4.25% flat income tax rate

Michigan applies a single flat rate of 4.25% to taxable income for the 2026 tax year. There are no graduated brackets, so a household earning $50,000 and one earning $500,000 face the same marginal rate. The rate is set in the Michigan Income Tax Act and applied after exemptions and allowable subtractions.

The rate has moved once in recent memory. A 2015 law built in an automatic reduction that triggers when general fund revenue grows faster than inflation. That trigger produced a one-year cut to 4.05% for the 2023 tax year, after which the rate reverted to 4.25% for 2024. In April 2026, the state treasurer determined that the calculation did not require a reduction, so 4.25% stands for the 2026 tax year.

Because the rate is flat, your marginal and average state rates are effectively the same once you clear the exemption. If you want the distinction between the two concepts, see our explainer on marginal vs effective tax rate. State income tax also works differently from the federal system, which uses brackets; the differences between state and federal income tax matter when you plan withholding.

The Michigan personal exemption in 2026

For the 2026 tax year, Michigan allows a personal and dependent exemption of $5,900 per person, up from $5,800 for 2025. You claim one exemption for yourself, one for a spouse on a joint return, and one for each dependent. The total reduces the income subject to the 4.25% rate.

A married couple with two children, for example, may claim four exemptions worth $23,600 in 2026, cutting roughly $1,003 off the state tax bill at the flat rate. The exemption amount is indexed and generally rises each year, so confirm the figure on the current Form MI-1040 instructions before filing.

Michigan also offers additional special exemptions in some cases, such as for taxpayers or dependents who are deaf, blind, paraplegic, or totally and permanently disabled, and for certain qualified disabled veterans. These are claimed on top of the standard exemption and can change the amount you owe depending on circumstances.

Michigan city income taxes (Detroit and others)

Twenty-four Michigan cities impose a local income tax that stacks on top of the 4.25% state rate. Residents of a taxing city generally pay on all income; nonresidents who work in the city generally pay only on income earned inside city limits, usually at half the resident rate. Detroit has the highest rate.

Most taxing cities charge 1% for residents and 0.5% for nonresidents. A handful charge more, as the table shows. City tax is administered separately from the state return, though many cities now participate in a common filing system.

A Detroit resident, for instance, can face a combined 6.65% top rate (4.25% state plus 2.4% city) before exemptions. The other 20 cities at the standard rate include Albion, Big Rapids, East Lansing, Grayling, Hamtramck, Hudson, Ionia, Lapeer, Muskegon Heights, Port Huron, Portland, Springfield, and Benton Harbor. City rules and boundaries can change, so verify with the specific city before relying on a rate.

How Michigan taxes retirement income in 2026

For the 2026 tax year, Michigan completes a four-year phase-out of the restrictions it placed on retirement-income deductions in 2012. Public Act 4 of 2023, the Lowering MI Costs plan, restores a broad subtraction for pension and retirement income, and Social Security benefits remain fully exempt from Michigan tax. The result is that most retirees pay less Michigan tax on retirement income than they did before 2023.

In 2026, eligible taxpayers may subtract retirement and pension income up to roughly $67,610 for a single filer and $135,220 for a joint return, regardless of birth year, with the limits indexed annually. Income above those limits is taxed at the flat 4.25% rate. Public pension income is generally subtracted up to the same private-retirement maximum, except for taxpayers born before 1946, whose public benefits may remain fully deductible.

Distributions are reported to you on Form 1099-R, which you use to figure the subtraction. The rules turn on birth year, source of the pension, and filing status, so the amount you can subtract may vary. Confirm the current-year figures and eligibility on the Michigan Department of Treasury retirement guidance before you file.

Residency and who must file

Your residency status decides which Michigan return you file and how much of your income the state can tax. Full-year residents file Form MI-1040 on worldwide income. Part-year residents and nonresidents attach Schedule NR and are taxed only on income earned from Michigan sources. The filing deadline for the 2026 tax year is April 15, 2027, matching the federal date.

Michigan treats you as a resident if the state is your permanent home. A temporary absence, such as wintering in a warmer state, does not by itself make you a part-year resident. You become a part-year resident in the year you move into or out of Michigan, and you owe tax on income earned while you lived there.

Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin. A resident of one of those states who works in Michigan is generally not subject to Michigan tax on wages, and a Michigan resident working in those states pays only Michigan tax on that wage income. If you commute across one of these borders, filing an exemption form with your employer can stop the wrong state from withholding. Neighboring Ohio’s state income tax works differently for residents there. Unlike Michigan, several states levy no income tax at all, which can matter if you are weighing a move.

Frequently asked questions

What is the Michigan state income tax rate for 2026?

Michigan applies a flat 4.25% income tax rate for the 2026 tax year. There are no graduated brackets, so the same rate applies to all taxable income above your exemptions. A 2015 automatic-reduction trigger briefly lowered the rate to 4.05% for 2023, but it reverted to 4.25% for 2024 and remains there for 2026 after the annual calculation required no cut.

Does Michigan tax Social Security and retirement income?

Social Security benefits are fully exempt from Michigan income tax. For 2026, the Lowering MI Costs plan completes its phase-in, letting eligible taxpayers subtract pension and retirement income up to roughly $67,610 (single) or $135,220 (joint), indexed annually. Amounts above those limits are taxed at 4.25%. The exact subtraction can vary by birth year, pension source, and filing status.

Which Michigan cities have a city income tax?

Twenty-four Michigan cities levy an income tax on top of the state rate. Detroit charges the most at 2.4% for residents and 1.2% for nonresidents. Grand Rapids and Saginaw charge 1.5% / 0.75%, Highland Park charges 2% / 1%, and 20 other cities, including Lansing, Flint, and Jackson, charge 1% for residents and 0.5% for nonresidents.

How much is the Michigan personal exemption in 2026?

The Michigan personal and dependent exemption is $5,900 per person for the 2026 tax year, up from $5,800 in 2025. You claim one for yourself, one for a spouse on a joint return, and one per dependent. Special additional exemptions may apply for certain disabled taxpayers and qualified disabled veterans. The base amount is indexed and generally rises each year.

Do I have to file a Michigan return if I live in another state?

You may need to file if you earned income from Michigan sources, using Form MI-1040 with Schedule NR as a nonresident. Residents of Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin are generally exempt from Michigan tax on wages under reciprocal agreements, though Michigan-source business or rental income can still create a filing obligation depending on the facts.

When is the Michigan income tax return due for 2026?

The Michigan individual income tax return for the 2026 tax year is due April 15, 2027, aligned with the federal filing deadline. If that date falls on a weekend or holiday in a given year, the deadline shifts to the next business day. A federal extension generally extends the Michigan filing deadline, but it does not extend the time to pay any tax owed.

Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.