Data Notice: Michigan tax data in this guide uses projected 2026 figures derived from current law and IRS inflation indexing. Mid-year legislative changes may alter rates or brackets. Check with the Michigan revenue department for the latest information. [taxes-michigan-2026]

Taxes in Michigan: State Tax Guide 2026

Tax information in this article on taxes in michigan: state tax guide 2026 is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change, and individual circumstances vary. Consult a qualified tax professional or CPA for guidance specific to your situation.

Michigan keeps its income tax simple with a flat rate of 4.25%, making it one of the more straightforward state tax systems in the country. However, a handful of cities — including Detroit, Grand Rapids, and Flint — levy their own local income taxes, an unusual feature that adds complexity for residents and commuters. Property taxes tend to run above the national average, and a generous homestead exemption creates a significant gap between how primary residences and other properties are taxed.

Michigan Income Tax Rates (2026)

Michigan imposes a flat-rate income tax:

Tax Rate	Taxable Income Range
4.25%	All taxable income

The rate applies equally to all filing statuses and income levels. Michigan briefly lowered the rate to ~4.05% for tax year 2023 under a trigger mechanism, but the rate reverted to 4.25%.

Michigan offers a personal exemption of ~$5,600 per taxpayer and dependent. There is no standard deduction; instead the personal exemption serves a similar role.

Local income taxes: 24 Michigan cities levy their own income taxes. Detroit’s rate is 2.40% for residents and 1.20% for nonresidents who work in the city. Other cities typically charge 1.00% for residents and 0.50% for nonresidents.

Sales Tax

Component	Rate
State rate	6.00%
Local add-on	None
Combined rate statewide	6.00%

Michigan does not permit local sales tax add-ons, keeping the rate uniform at 6.00%.

Exempt from sales tax: Groceries (food for home preparation), prescription medications, newspapers, and residential utility usage up to certain thresholds.

Property Tax

Metric	Amount
Average effective rate	~1.38%
National average	0.99%
Rank	Among the 10 highest nationally

Michigan property taxes are above average. The state uses two key values: State Equalized Value (SEV), which is 50% of market value, and taxable value, which cannot increase more than the rate of inflation or 5% per year (whichever is lower) under Proposal A (1994).

Homestead exemption: Owner-occupied primary residences are exempt from the 18-mill school operating tax, which can reduce the effective rate by approximately 0.30%–0.40%. Non-homestead properties (second homes, rentals, commercial) pay the full millage.

Example: A home with a market value of $250,000 and a taxable value of $110,000 (long-term owner) in a typical suburb might pay ~$3,500 per year if homesteaded, compared to ~$4,500 for the same property without the homestead exemption.

Other Taxes

Estate and inheritance tax: Michigan does not impose a state estate tax or inheritance tax.
Capital gains: Taxed as ordinary income at the flat 4.25% rate.
Use tax: 6.00%, applied to out-of-state purchases where sales tax was not collected.
Fuel tax: ~$0.302 per gallon of gasoline.
Cigarette tax: ~$2.00 per pack.
Cannabis tax: 10% excise tax on recreational marijuana sales, in addition to the 6% sales tax.
Registration tax: Annual vehicle registration fees are based on the vehicle’s MSRP and model year.

Tax Breaks and Credits

Homestead property tax credit: Renters and homeowners with household income below ~$63,000 can claim a credit on their state return. Homeowners claim the credit based on property taxes exceeding 3.2% of household income. Renters use 20% of rent paid as the property tax equivalent.
Home heating credit: Low-income households can receive a credit for heating costs.
Retirement income: Michigan’s treatment of retirement income depends on birth year. Taxpayers born before 1946 can exempt all pension and retirement income. Those born 1946–1952 can exempt up to ~$56,961 (single) or ~$113,922 (joint). Those born after 1952 receive a more limited deduction.
Michigan EITC: ~6% of the federal Earned Income Tax Credit.
Farmland preservation credit: Farmers whose property taxes exceed 3.5% of household income can claim the excess as a credit.
Disabled veterans exemption: Property tax exemption for 100% disabled veterans.

Key Takeaways

Michigan’s flat 4.25% income tax is simple, but local income taxes in 24 cities (up to 2.40% in Detroit) add a layer of complexity
Property taxes average ~1.38%, well above the national average, though the homestead exemption provides significant relief for primary residences
Sales tax is a uniform 6.00% statewide with no local add-ons
Retirement income tax treatment varies dramatically by birth year — a critical factor for retirees
No state estate or inheritance tax applies

Next Steps

Compare Michigan to other states at State Income Tax Comparison: All 50 States Ranked
Understand your federal obligation with the Federal Income Tax Guide 2026
Make sure you claim everything you can — Tax Deductions You’re Probably Missing
Ready to file? See How to File Your Taxes Step by Step

Tax information is for educational purposes only. Consult a licensed tax professional.