Yes, Michigan does have a state income tax. It is a flat 4.25% for the 2026 tax year, applied to nearly every kind of earned and investment income, with a personal exemption of $5,900 per person.1Michigan Department of Treasury. State Individual Income Tax Rate for 2026 Tax Year Determined Michigan has taxed personal income since 1967.2Michigan Legislature. Michigan Compiled Laws Act 281 of 1967 – Income Tax Act of 1967 What has changed recently is how retirement income, tips, and overtime are treated, so even long-time filers have new choices to make.
The Flat Rate
Michigan does not use brackets. Every dollar of taxable income is taxed at the same percentage whether you earn $30,000 or $300,000.3Michigan Legislature. Michigan Compiled Laws 206.51 – Income Tax Act of 1967 For 2026 that rate is 4.25%.
State law contains a revenue trigger that can temporarily lower the rate if general fund revenue grows faster than inflation in a given fiscal year.3Michigan Legislature. Michigan Compiled Laws 206.51 – Income Tax Act of 1967 That trigger fired for the 2023 tax year, briefly dropping the rate to 4.05%. An Attorney General opinion concluded the reduction was a one-time event, and the rate returned to 4.25% for 2024 and has stayed there.
Who Has to File
You must file a Michigan return if your taxable income is more than your personal exemption allowance. For 2026 that means single filers over $5,900 and joint filers over $11,800.4Michigan Department of Treasury. 2026 Michigan Income Tax Withholding Guide You also need to file if Michigan tax was withheld from your pay, even if your income falls below that threshold, because filing is the only way to get that money refunded.5Michigan Department of Treasury. What Are the State of Michigan Individual Income Tax Filing Requirements
Part-year residents and nonresidents with Michigan-source income follow the same rules. They file the MI-1040 with Schedule NR to allocate income between Michigan and other states.
Even filers who owe nothing sometimes benefit from filing anyway. Several Michigan credits are refundable, so the state sends money out even when the tax bill is zero. Skipping the return means leaving that money behind.
How Michigan Figures Taxable Income
You do not start from scratch. Michigan taxable income begins with the federal adjusted gross income from your federal return and is then modified through state-specific additions and subtractions on Schedule 1.6Michigan Legislature. Michigan Compiled Laws 206.30 – Income Tax Act of 1967
Common additions that increase your taxable income:
- Interest from municipal bonds issued by other states, which is federally tax-free but taxable in Michigan.
- The self-employment tax deduction you claimed federally, added back for Michigan.
- The federal net operating loss deduction, reversed because Michigan has its own NOL rules.
Common subtractions that reduce your taxable income:
- Interest from U.S. Treasury bonds, savings bonds, and similar federal obligations.
- Military retirement pay from service in the U.S. Armed Forces or Michigan National Guard.
- Contributions to a Michigan Education Savings Program (MESP) or Michigan Education Trust (MET) account.
- Income earned inside a designated Renaissance Zone.
After those adjustments, subtract the $5,900 personal exemption per person, doubled on a joint return.4Michigan Department of Treasury. 2026 Michigan Income Tax Withholding Guide Qualified disabled veterans get an additional $300 exemption. Multiply what is left by 4.25% and you have your tax liability before credits.
Retirement, Pension, and Social Security Income
Michigan’s treatment of retirement income has depended almost entirely on when you were born, and 2026 changes that. The phase-in subtraction the state has been rolling out reaches 100% of eligible retirement benefits for the 2026 tax year, and any retiree can now elect it regardless of birth year.7Michigan Department of Treasury. Retirement and Pension Benefits
The older birth-year tiers still exist as an alternative, because for some retirees they produce a better result:
- Born before 1946: public pension income is fully exempt, and private pension plus investment income (dividends, interest, capital gains) can be subtracted up to $14,688 single or $29,376 joint.8Michigan Department of Treasury. Michigan Schedule 1 Additions and Subtractions
- Born 1946 through 1952: those who have reached age 67 qualify for a Tier 2 Michigan Standard Deduction against retirement and pension benefits.
- Born 1953 through January 1, 1959: those who reached age 67 qualify for a smaller Tier 3 Michigan Standard Deduction.
- Born after January 1, 1959: historically no birth-year subtraction, but the phase-in now covers this group.
Each year you can pick whichever calculation gives the best result: the birth-year tier, the phase-in subtraction, or a separate occupational subtraction available to retired firefighters, police, and corrections officers.
Social Security benefits have long been subtractable from Michigan taxable income and still are. If your federal AGI includes taxable Social Security, you subtract the full amount on your Michigan return.8Michigan Department of Treasury. Michigan Schedule 1 Additions and Subtractions
Temporary Exemptions for Tips and Overtime
Starting with the 2026 tax year and running through 2028, Michigan will not collect income tax on qualified tips, the premium portion of overtime pay, or Social Security benefits. Tips are covered where tipping is customary. The overtime provision applies only to the premium (the extra pay above your regular hourly rate for hours worked beyond 40 in a week), not to base wages for those hours.
For Social Security, the new law reinforces an exemption that already existed through the Schedule 1 subtraction, applying it across all birth-year groups without navigating the tier structure. These exemptions are currently set to expire after the 2028 tax year unless the legislature extends them.
Credits That Can Pay You Back
Two Michigan credits are refundable, meaning the state pays you the difference if the credit exceeds what you owe.
Earned Income Tax Credit
If you qualify for the federal EITC, Michigan’s version is 30% of the federal credit. That is up from the 6% rate in place before 2023. You must file the federal return and claim the federal EITC to qualify, and you must file an MI-1040 even if you would not otherwise have to. Full-year residents, part-year residents, and nonresidents with Michigan taxable income are all eligible.9Michigan Department of Treasury. Michigan Earned Income Tax Credit for Working Families
Homestead Property Tax Credit
Michigan homeowners and renters can claim a credit based on the property taxes on their primary residence. Total household resources must be $71,500 or less, and for homeowners the taxable value of the home must be $165,400 or less. You also need six months of Michigan residency during the year.10Michigan Department of Treasury. Michigan Taxpayers Encouraged to Check Eligibility for Homestead Property Tax Credit Renters qualify because Michigan treats part of your rent as property tax paid indirectly. The average credit is around $820, though the actual amount depends on the relationship between your property taxes and your household income.
City Income Taxes Are Separate
On top of the 4.25% state rate, around two dozen Michigan cities levy their own income taxes. Most charge residents 1% and nonresidents who work in the city 0.5%. Detroit, Grand Rapids, Highland Park, and Saginaw charge higher rates. Detroit’s is the steepest, at 2.4% for residents and 1.2% for nonresidents in recent years.
City income taxes are separate from the state return and usually require their own filing. Your employer may withhold city tax, but you still file a city return to reconcile withholding against what you actually owe. This tends to catch people who move into a taxing city partway through the year or who commute across city lines for work.
Filing and Paying
The primary form is the MI-1040, posted on the Michigan Department of Treasury website with its instruction booklet.11Michigan Department of Treasury. Michigan Individual Income Tax Forms and Instructions You need your W-2s, any 1099s, and your completed federal return, since Michigan taxable income flows from federal AGI. Most filers also complete Schedule 1 for additions and subtractions and attach it to the return.8Michigan Department of Treasury. Michigan Schedule 1 Additions and Subtractions
Returns are due April 15. E-filing through approved software is the fastest route and gives you confirmation of receipt. If you mail a paper return, the address depends on whether you expect a refund or are enclosing a payment; both are listed in the instruction booklet. When paying by check, include Form MI-1040-V as a payment voucher. Do not staple the check to the voucher; put both loose in the envelope.12Michigan Department of Treasury. Instructions for Form MI-1040-V 2025 Michigan Individual Income Tax Payment Voucher Electronic payments by bank withdrawal are accepted too.
Extensions and Late Penalties
If you need more time, you have two options. Filing a federal extension with the IRS automatically extends your Michigan deadline to match. Or you can send Michigan Form 4 directly to the Department of Treasury.13Michigan Department of Treasury. Application for Extension of Time to File Michigan Tax Returns Without a federal extension, Treasury generally grants six months.
An extension to file is not an extension to pay. If you expect to owe, you must send the payment with Form 4 or a copy of the federal extension by the original April 15 deadline. Extension requests without the required payment are denied.13Michigan Department of Treasury. Application for Extension of Time to File Michigan Tax Returns Expecting a refund instead? You do not need an extension at all. You can claim a refund up to four years from the original due date.
Miss the deadline without an extension and the penalties stack. Michigan charges 5% of the unpaid tax for the first two months (or any portion of that period), then another 5% for each month the balance remains unpaid, capped at 25%. Interest runs separately from the original due date until the balance is paid in full.14Michigan Legislature. Michigan Compiled Laws 205.24 – Revenue Act