State Taxes at a Glance – Michigan
| Type of Tax | 2023 |
|---|
| Individual Rates | 4.25% (flat tax) |
| Corporate / Business Tax Rates | 6.00% (flat tax) |
| Gross Receipts Tax | None |
| Sales Tax | 6.00% |
| Property Taxes | 1.38% as a percentage of primary home |
| Estate or Inheritance Tax | None |
State Income Taxes in Michigan
Michigan is one of a few states with a flat individual income tax. Michigan’s individual tax rate is 4.25% of your total income.
Local Income Tax Rates – in addition to your state tax, there are 23 or so cities and counties in Michigan that assess an additional local tax rate. They are between 1% to 2.4% for residents. If you’re a non-resident of Michigan, your local tax rate is cut in half (0.50% to 1.2%).
State Business Taxes in Michigan
The state of Michigan has a flat Corporate Tax rate of 6.00%. For other business entities that are flow-thru entities, such as S Corporations, Partnerships, LLCs, etc., they are taxed the individual income tax rate of 4.25%
Property and Sales Taxes in Michigan
Sales Tax – unlike many other states Michigan has a single sales tax rate, at the state level. The state rate is 6.00%
Property Taxes in Michigan – The average property tax rate for residential property in the state of Michigan is 1.38% making it more expensive than other states (the national average is 1.08%).
Homestead – The state of Michigan does have a homestead tax credit. You must meet the following tests
- Your primary home is in Michigan
- Have lived there for over 6 months
- You own or pay rent in Michigan
- Your home’s taxable value is < $135,000
- Your income is < $60,000
If you need more information, here’s a link to the Michigan.gov website on homestead.
Michigan DMV Fee
Michigan’s DMV fees are based on vehicle’s MSRP value. Since it’s based on the value of the vehicle, it’s considered an Ad Valorem tax, and is deductible on your personal tax return. You may learn more about your Michigan’s DMV Fees here.
Michigan Domicile
Michigan’s presumption is that it’s your domicile if you’ve lived there for over 183 months and that you also maintain a place of abode.
State Tax on Social Security Benefits
Even though Michigan has an income tax, social security benefits are not subject to state tax in “The Great Lakes State.”
Payroll taxes in Michigan
Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:
- Wage Base – Michigan has a wage base of $9,500
- UI Rates – range from 0.06% to 10.30% which is high for UI
- Schedules – Michigan has multiple rate schedules regarding UI
Michigan Business Entities – LLCs
Michigan is an inexpensive state to open an LLC. Here are some important facts:
- Michigan’s annual LLC fee at only $25.
- When you register with the state, you pay a one time fee of $50
- Secretary of State of Michigan website – click here
Michigan Tax Phone Numbers
Important phone numbers for the Michigan Department of Taxation:
- Website: www.michigan.gov/taxes
- Phone# for Individuals – (517) 636-4486
- Phone# for Businesses – (517) 636-6925