Michigan Tax Guide 2025
Explore Michigan's 2025 state tax rates for income, sales, property, retirement, and more. Learn how Michigan compares nationwide.
Navigating the complexities of state taxes can be daunting, but understanding Michigan's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of Michigan's tax system, from income and sales taxes to property taxes and retirement benefits.
Michigan state tax: Overview
In Michigan, you’ll notice that property taxes can be on the higher side, and the state’s fuel taxes are also steeper than in many others. But when it comes to income tax, Michigan keeps it pretty straightforward with a flat 4.25% rate.
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That said, some cities add their own taxes, so the rate can vary depending on where you live.
On a more positive note, Michigan’s sales tax is relatively low, which helps make everyday purchases a little less taxing.
In the news: Michigan will continue phasing out its retirement income tax this year. Michiganders born between 1946 and 1966 can deduct up to 75% of their retirement and pension income. The initiative is part of the broader Lowering MI Costs Plan to fully exempt most retirement income by 2026.
Read more in, State Tax Changes for 2025: Key Reforms and What They Mean for Your Finances.
[Data for this state tax guide was gathered from a number of sources including the U.S. Census Bureau, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]
Michigan income tax rate
Michigan has a flat 4.25% individual income tax rate.
Michigan Retirement Taxes
- Social Security: Not taxable
- Pensions: Partially taxable (Military pensions are tax-exempt)
- 401(k) and IRA Distributions: Partially taxable
- Military pensions and Railroad Retirement benefits are exempt in Michigan.
Michigan sales tax
Michigan's sales tax rate is 6%. There are no local taxes.
- Groceries: Exempt, but prepared food is taxable
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
How much is property tax in Michigan?
In Michigan, the property tax rate paid as a percentage of assessed value is 1.24% according to the Tax Foundation.
Michigan gas tax
Product | Tax |
|---|---|
Gasoline | $0.19 per gallon |
Disel | $0.15 per gallon |
Source: The Sales Tax Handbook
Michigan taxes on alcohol and tobacco
Michigan tobacco taxes
Product | Tax |
|---|---|
Cigarettes | $2 per pack |
Other Tobacco Products | 32% of wholesale price |
Medical Marijuana | 6% |
Recreational Marijuana | 16% (6% cannabis sales tax plus 10% state excise tax) |
Michigan alcohol taxes
Product | Tax |
|---|---|
Beer | $0.20 per gallon |
Wine | $0.51 per gallon ($0.76 if above 16% alcohol by volume) |
Liquor | state-controlled |
Source: The Sales Tax Handbook
Michigan estate and inheritance taxes
Michigan has no estate or inheritance tax.
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