Michigan State Taxes Guide

As a Michigan taxpayer, you need to pay state and local income taxes and sales and use tax. The Michigan state income tax rate is 4.05 percent for 2023, down from 4.25% in 2022. However, local city taxes are also levied on top of the state income tax, ranging from 1 percent to as much as 2.4 percent in Detroit. You may also need to file business returns and other documents. You can make your Michigan state tax payments online or by mail. Penalty and interest charges will apply if you don’t file or pay on time.

You must file Michigan state taxes if you’re a state resident or earned income from within the state (for part-year and nonresident residents). If you have income from employment in a reciprocal state, your employer should withhold Michigan income tax.

Some state taxes are very clear:

• They’re collected on a statewide basis.
• They’re uniform for all taxpayers.
• The revenues are deposited into state funds to finance state government activities.

However, other state taxes, such as the airport parking excise tax, are collected only in specific areas and used primarily for local purposes, even though they’re considered state taxes.

You can pay your Michigan state taxes online using the Michigan Individual Income Tax e-Payments system or pre-printed vouchers MI-1040ES to send in a check or money order. Write your last four Social Security numbers and the tax year on the check or money order. You can also use the e-payments system to pay for a credit or debit card.

Michigan State Taxes Exemptions

Michigan offers several exemptions and deductions for state taxes, primarily focused on personal income tax. These exemptions help reduce the taxable income of residents and certain nonresidents.

• Standard Personal Exemption: Each taxpayer is allowed to reduce their taxable income by $4,900 per person for the tax year 2023.
• Dependent Exemption :Taxpayers can claim an exemption of $4,900 for each dependent, reducing taxable income for the tax year 2023.
• Senior Exemption: Taxpayers aged 65 or older can claim an additional exemption, reducing their taxable income by $4,900.
• Disabled Exemption: Individuals who are disabled or have disabled dependents can claim an additional exemption of $4,900, further reducing their taxable income.
• Special Exemption: Blind individuals, deaf individuals, or those with certain severe disabilities can claim an additional exemption of $4,900.
• Retirement Income Exemption: Allows for exemptions on certain types of retirement income. For example, Social Security benefits are fully exempt, and other qualifying retirement income can be partially exempt based on specific criteria.
• Homestead Property Tax Credit: This program provides a credit for homeowners and renters with household incomes below a certain threshold, helping to offset property taxes. The credit amount varies based on income and property taxes paid.
• Homestead Exemption Provides an exemption from local property taxes for homeowners on their primary residence. The exemption amount varies based on local regulations.
• Student Loan Interest Deduction: Permits the deduction of student loan interest paid during the tax year from taxable income up to a certain limit.
• Charitable Contributions Deduction: This law allows taxpayers to deduct certain charitable contributions from their state taxable income. The deduction is subject to limits based on a percentage of the taxpayer’s adjusted gross income.
• Medical Savings Account Deduction: Provides a deduction for contributions made to a medical savings account, reducing taxable income by the amount contributed, up to specified limits.
• Military Pay Exemption: Exempts active duty military pay from Michigan income tax, fully excluding this income from taxable income.
• Veterans’ Benefits Exemption: Exempts benefits received from the U.S. Department of Veterans Affairs from Michigan income tax, fully excluding these benefits from taxable income.

Michigan State Taxes Due Dates

For more information, visit the Michigan Department of Treasury website.