How Michigan taxes a paycheck
Michigan's constitution requires a flat rate and the rate has been 4.25% since 2012, apart from 2023, when a revenue trigger dropped it to 4.05% for one year before it reverted. There is no standard deduction; a $5,900 personal exemption per filer and per dependent, indexed each year, is subtracted instead. Michigan's 2023 reforms restored the full retirement income deduction and quintupled the earned income credit, neither of which appears on a wage calculation.
The local layer is a city tax in 24 municipalities. Detroit charges 2.4% on residents and 1.2% on non-residents who work in the city; Grand Rapids 1.5% and 0.75%; Saginaw 1.5% and 0.75%; and the other 21, including Lansing, Flint and Pontiac, 1% and 0.5%. Employers in those cities withhold it. Michigan's counties do not tax income.
The 2026 legislature also enacted state deductions for tipped income and overtime pay for 2026 through 2028, mirroring the federal change; they are not modelled.
How much taxes are taken out of paychecks in Michigan?
On a $60,000 salary in 2026, a single filer in Michigan pays about $5,020 in federal income tax, $4,590 in Social Security and Medicare, and about $2,300 in Michigan income tax, leaving roughly $48,090 a year or $1,850 every two weeks before city tax. A Detroit resident would pay a further $1,440.
The state share is 3.8% of gross and, being flat, rises only slowly: 4.1% on $150,000. A married couple with two children on $100,000 shelters $23,600 in exemptions and pays about $3,250.
Michigan compared with its neighbours
Michigan borders Ohio, Indiana and Wisconsin. On a $60,000 single salary the state tax is about $2,300 in Michigan, $870 in Ohio, $1,740 in Indiana and $1,860 in Wisconsin. Michigan's rate is the highest of the four, though Ohio and Indiana add local taxes that Wisconsin and most of Michigan do not.
Toledo and Detroit both tax city wages, at 2.5% and 2.4%; Ohio's state tax is far lower than Michigan's, so a Toledo worker's combined bill on $60,000 (about $2,370) is still below a Detroit resident's (about $3,740).
Withholding forms and filing status in Michigan
Michigan employers withhold from Form MI-W4, on which employees claim exemptions at $5,900 each; withholding is 4.25% of wages above them. City tax is withheld on separate city forms (Detroit's DW-4, for example) based on residence and place of work. Filing status does not change the rate; a married couple simply claims two exemptions.
Michigan's tax year is the calendar year and Form MI-1040 is due 15 April, with the city returns (Detroit's 5118 series) filed separately. Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin, so a Toledo resident working in Detroit pays only Ohio, and a Michigan resident working in Chicago pays only Michigan. City taxes are outside the agreements: an Ohio resident working in Detroit still owes Detroit's 1.2% non-resident rate.