Michigan

Sales Tax

  • Statewide: 6.0%
  • Counties cannot levy an additional sales tax.
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
    • Unprepared Foods: Exempt
    • Residential heating fuel and electricity: 4%
  • Gasoline Tax: 66.40 cents/gallon (Includes all state, local, and federal taxes)
  • Diesel Fuel Tax: 77.90 cents/gallon (Includes all state, local, and federal taxes)

 

Personal Income Tax

  • Personal Income Tax Rate Range: 4.25%.  
  • Standard deduction: None
  • Personal Exemption Allowance: $5,600. Dependent Exemption: $5,600. Disabled: $2,900, plus additional $400 if a veteran.
  • Itemized Deductions Allowed? No
  • Retirement Income
    • Social Security: Exempt
    • IRAs: Taxable at ordinary income tax rates unless a Michigan retirement plan*
    • 401Ks/Defined contribution employer retirement plans: Taxable at ordinary income tax rates*
    • Private pensions: Taxable at ordinary income tax rates*
    • Public Pensions: Taxable at ordinary income tax rates*
  • Military Pay
    • Active Duty Pay: Exempt
    • Military Retirement Pay: Michigan exempts military retirement pay, but the pay still may factor into tax calculations. The state uses a three-tier system based on age and the amount of pension received. Consult a tax professional to determine its impact on you. 
    • Military Disability Pay: Exempt
    • VA Disability Dependency & Indemnity Compensation Benefits: Exempt
    • SBP/SSBP/RCSBP/RSFPP: Michigan will not tax military survivor benefits that are exempt from federal income tax and are not included in federal adjusted gross income. Survivor benefits that
      are classified as military compensation or military retirement pay may be deducted to the extent they are included in federal adjusted gross income for the surviving spouse only. Military retirement benefits must be reported on the Schedule W even if no Michigan tax was withheld. (Source)
  • Income tax comments: *Retirement and survivor benefits are taxed differently depending on age. More favorable retirement income rules are in effect for some individuals born before 1946. Retirement income for individuals born after 1952 is usually fully taxable. (There is a narrow exception for individuals born between 1946 and 1952. State allows county- and city-level income tax.

 

Property Tax

  • Statewide property tax: $6 per $1,000 of assessed value
  • Local municipalities average 1.35% of the property's assessed value.
  • Calculation of assessed value: 100% of fair market value
  • Relief programs for:
    • Owner-Occupied: Property tax credit of up to $1,700 if meet income and property value requirements. Cannot increase more than 5% or the Consumer Price Index per year, whichever is lower.
    • Disabled Veterans/Surviving Spouses: 100% tax credit available if 100% service-connected disability.
    • 65 and Over: Credit of up to $1,700 if meet certain requirements.
    • 62 or Older and Disabled/Blind: May defer summer taxes if income is less than $40,000. Winter tax deferral available if 65 or older.
  • Personal Property Tax: Yes. Rates and exemptions vary.
  • Deferral programs are also available.

 

Inheritance & Estate Taxes: None

 

Department of Revenue website: www.michigan.gov/treasury

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