Michigan State Income Tax in 2025: A Guide

Michigan keeps things straightforward for taxpayers with a flat state income tax rate of 4.25% for the 2024 tax year (the taxes you file in 2025). Whether you’re a low or high earner, you pay the same percentage, making your tax easier to calculate and predict. 

The flat tax approach removes the complexity of multiple tax brackets and helps streamline the filing process, allowing you to focus on maximizing your credits and deductions. 

Keep in mind that you may be required to pay additional local income taxes based on where you live. Michigan cities such as Detroit, Saginaw, Highland Park, and Grand Rapids levy additional income tax at various rates. 

Want more information on Michigan’s tax system? Read on to better understand the essentials of filing Michigan state income taxes this year and learn how to maximize available tax benefits. 

*Note you are still responsible for federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only.

Who has to file Michigan state income tax?

If you are a Michigan resident, you must file a return if you file a federal return or if your income exceeds the exemption allowance. 

In addition, nonresidents who earn income from Michigan sources—like business or rental income—may also need to file. Generally, Michigan’s income tax filing requirement relies on residency and income type. Even part-year residents may have a tax obligation if they earned income in the Wolverine State.

How Michigan residency impacts tax filing

Michigan has three residency statuses for tax purposes: resident, part-year resident, and nonresident. Your residency status affects how much of your income is taxable by Michigan and determines which forms you file. The chart below provides an overview of residency status, who qualifies, and how Michigan taxes income for each group: 

Residency status	Definition	How Arizona taxes income
Resident	You lived in Michigan for the entire tax year or consider Michigan your permanent home.	All income is taxed, regardless of where it is earned.
Part-year resident	You lived in Michigan for part of the year but established residency or moved out during the tax year.	Income earned while a resident and Michigan-sourced income are taxed.
Nonresident	You lived outside Michigan for the entire tax year but earned income from Michigan sources.	Only Michigan-sourced income is taxed.

Source: Michigan Department of Revenue 

There are a handful of other noteworthy factors. Nonresidents of Michigan who live in reciprocal states (Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin) who’ve had Michigan tax withheld from wages must file a Michigan income tax return to claim refunds of Michigan taxes withheld. You must also file a return if you had business activity or lottery, casino, or licensed horse track winnings from sites in Michigan.

Other income tax considerations in Michigan

In addition to wages, Michigan taxes certain types of income differently, including retirement and investment earnings. They’re subject to taxation in the following ways: 

• Retirement and pension income: Some retirement income is deductible using a tiered system, which depends on age, birth year, and occupation. By tax year 2026, retirement and pension income will be fully exempt from Michigan income tax.  
• Investment income: Interest and dividend income may qualify for a deduction if you’re a senior citizen. Individuals born prior to 1946 can deduct up to $14,274 if filing single and $28,548 if married filing jointly. 
• Social Security income: Michigan does not tax Social Security benefits. 
• Military income: Active duty and military retirement pay are exempt from Michigan state income tax.

Common Michigan state tax exemptions, deductions, and credits

Michiganders can adjust their taxable income through exemptions, credits, additions, and subtractions — all of which affect overall tax liability. 

Tax exemptions reduce the amount of income subject to tax. For example, in Michigan, you can claim a personal exemption of $5,600 plus $5,600 for each dependent. Additional exemptions include: 

• $5,600 for the parent of a stillborn child with a state-issued certificate 
• $3,300 for each person in the household who is deaf, blind, or permanently disabled 
• $500 for disabled veterans in the household 

Slightly different from tax exemptions, tax credits reduce your tax liability. Here are a few common tax credits in Michigan:

Tax Credit	Description	Amount
Earned Income Tax Credit (EITC)	A credit for low- to moderate-income workers to reduce tax owed.	30% of the federal EITC amount; federal EITC is up to $7,830.
Home Heating Credit	Helps eligible low-income households cover heating costs during the winter.	Varies by income and household size.
Homestead Property Credit	Provides relief for eligible homeowners or renters based on property taxes paid.	Up to $1,800 based on income and property tax ratio.

Michigan’s tax law also includes additions and subtractions that adjust your taxable income, impacting the final amount owed. Once you understand these adjustments, you can better manage your Michigan tax obligations and potentially lower your tax bill. 

How to file Michigan state income tax

Knowing your Michigan residency status and how it impacts your tax deductions and credits is complex, but it doesn’t have to impact your tax-filing experience. Whether you want to independently file your taxes or use a trusted professional, TurboTax can help take taxes off your plate and maximize your deductions for the biggest possible refund.

Our local tax pros know all the ins and outs of Michigan tax laws. Connect with a local TurboTax professional in Michigan when you need expert tax advice or want your taxes prepared from start to finish. 

You can prepare your taxes with TurboTax online, or we can prepare them for you. TurboTax helps you get every applicable Michigan tax deduction and credit.