Overview of Michigan Taxes
Michigan has a flat income tax rate across the state, but some cities do charge an additional rate. Sales taxes are relatively low for the region, and there are no additional local sales taxes. Michigan has some of the highest average effective property taxes in the nation.
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Your Income Taxes Breakdown
| Tax Type | Marginal Tax Rate | Effective Tax Rate | 2023 Taxes* |
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* These are the taxes owed for the 2023 - 2024 filing season.
Your 2023 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2023 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2024
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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Taxes in Michigan
Michigan State Tax Quick Facts
- Income tax: 4.05% flat rate
- Local income tax: 0% - 2.40%
- Sales tax: 6%
- Property tax: 1.48% average effective rate
- Gas tax: 27 cents per gallon of regular gasoline and diesel
The Great Lakes State has made a number of changes to its tax code in recent years. In 2012, Michigan’s statewide flat tax rate fell from 4.35% to 4.25% and it dropped further to 4.05% in 2023, although the city income taxes levied by 24 Michigan cities, including Detroit, were untouched. At the same time, Michigan increased its personal exemption.
Michigan has a single sales tax rate of 6%. Elected officials have proposed raising the sales tax to help fund transportation infrastructure spending, but all proposals have been rejected in recent years. However, Michigan has raised its gas tax to one of the highest rates in the country.
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Michigan Income Taxes
Michigan has a flat income tax system, which means that income earners of all levels pay the same rate: 4.05% of taxable income. That is one of the lowest rates for states with a flat tax. In Michigan, adjusted gross income (which is gross income minus certain deductions) is based on federal adjusted gross income. However, taxpayers in Michigan can also claim the state personal exemption, which is $5,400 ($10,800 for joint filers) for the 2023 tax year.
Some cities in Michigan also collect their own income taxes. These range from 1% up to 2.40% for residents, with non-residents who work in those cities paying half the resident rate (meaning the local income taxes for these non-resident workers range from 0.50% to 1.20%). The table below shows the local and total income tax rates for every city in Michigan that has its own income tax. Cities that are not listed do not have a local tax and so residents of those cities only pay the state income tax of 4.05%.
Michigan Sales Tax
Unlike most other states, there are no city or county sales taxes in Michigan. This means that wherever you go in the state, you will pay the same 6% sales tax. That rate is lower than most states in the region. While food served in restaurants is taxed at the normal tax rate, most other kinds of food (including groceries) are not taxed. Prescription medications and newspapers are also exempt from this sales tax. Sales of electricity, natural gas and home heating fuels are taxed at a 4% rate.
Michigan Property Tax
Michigan has some of the highest property taxes in the nation, as measured by average effective property taxes (that’s total taxes paid as a percentage of the home’s market value). On average, residents of the Great Lakes State pay 1.48% of their home values in property taxes every year.
Since properties are valued and taxes are collected by local tax authorities, the amount of taxes paid varies significantly from one area to the next. If you’re looking to buy a home in Michigan, first head to our Michigan mortgage rates guide, where you will find mortgage rates and other details about getting a mortgage in the state.
Michigan Capital Gains Tax
Capital gains in Michigan are taxed as regular income at the state rate of 4.05%, though certain local jurisdictions may charge more.
Michigan Estate Tax
Michigan does not have an estate or inheritance tax.
Michigan Gas Tax
Michiganders currently pay a gas tax of 27 cents per gallon. The tax for diesel fuel is the same.
Michigan Alcohol Tax
Beer, wine and liquor are taxed at different rates in Michigan. Beer is taxed at a rate of 20 cents per gallon. This is below average for U.S. states. Wine is taxed at 51 cents per gallon and liquor is taxed at $12 per gallon, which is quite high.
- Michigan’s Mackinac Bridge connects the upper and lower peninsulas. It is the 24th-longest suspension bridge in the world.
- Parts of Michigan near Lake Superior receive more than 200 inches of snow a year.
- Detroit, Michigan is known as the “Motor City” because several of the nation’s largest automobile manufacturers, including General Motors Co. and Ford Motor Co., are based in the region.
