Overview of Michigan Taxes
Michigan has a flat income tax rate across the state but some cities do charge an additional rate. Sales tax is relatively low for the region – with a flat rate for the entire state and no additional local sales taxes. Michigan has the seventh highest average effective property taxes in the nation.
Number of Personal Exemptions
|Tax Type||Marginal |
|Total Income Taxes|
|Income After Taxes|
Total Estimated Tax Burden $
Percent of income to taxes = %
Total Estimated Tax Burden$
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Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Michigan state tax quick facts
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%, although the city income taxes levied by 22 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 county. Below, we’ll take an in-depth look at taxes across the state of Michigan to find out which rules and exceptions might affect you.
Michigan Income Tax
Michigan has a flat income tax system, which means that income earners of all levels pay the same rate: 4.25% of taxable income. That is the second-lowest rate 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 Michigan’s personal exemption, which is $4,000 for the 2017 tax year.
Some cities in Michigan also collect their own income taxes. These range from 1% up to 2.4% for residents, with non-residents who work in those cities paying half the resident rate (i.e. from 0.5% to 1.2%). 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 4.25%.
Michigan City Income Tax Rates
|City||State Rate||City Rate||Total City and State Rate|
To file your federal tax return, you can look into the best tax software or hire a professional accountant.
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 are not. Prescription medications and newspapers are also exempt from this sales tax.
Michigan Property Tax
Michigan has the eighth-highest property taxes in the nation, as measured by average effective property taxes (that’s total taxes paid as a percentage of market value). On average, residents of the Great Lakes State pay 1.78% 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. For example, Leelanau County has a tax rate below 1.00% while Wayne County (in which Detroit is located) has an effective property tax rate of 2.77%, highest in the state.
If you’re looking to buy a house and wish to further explore your options, head to our Michigan mortgage rates guide, where you will find the details about getting a mortgage and mortgage rates in the state.
Calculate Your Property Taxes: Michigan Property Tax Calculator
Michigan Capital Gains Tax
Capital gains in Michigan are taxed as regular income, at the state income tax rate of 4.25%.
Michigan Estate Tax
Michigan does not have an estate or inheritance tax.
Michigan Gas Tax
Michiganders currently pay a gas tax of 42.14 cents per gallon, which is sixth-highest in the nation. When you add federal taxes and fees, Michigan’s gas tax is over 60 cents per gallon of gasoline. The tax for diesel fuel, 42.54 cents per gallon, is seventh-highest in the U.S.
Michigan Alcohol Tax
Beer, wine and liquor are taxed at different rates in Michigan. Beer is taxed at a rate of $6.30 per barrel, or about 1.9 cents per 12-ounce beer. This is below average for U.S. states. Wine is taxed at 13.5 cents per liter if it contains less than 16% alcohol and 20 cents per liter above that limit. Liquor is taxed at 12% of the sale price.
Photo Credit: flickr
Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to rank the counties to calculate a total tax burden.