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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data BreachFarmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Serving the HNW Market: How Financial Advisers Can Break Through and Deliver Lasting ValueFinancial advisers have a significant opportunity to serve high-net-worth clients by elevating their capabilities, delivering comprehensive planning, building diverse teams and prioritizing family wealth education.
-
Standard Deduction 2026 Amounts Are HereTax Breaks What is the standard deduction for your filing status in 2026?
-
New 2026 Income Tax Brackets Are Set: Will Your Rate Change?Income Tax The IRS has adjusted federal income tax bracket ranges for the 2026 tax year to account for inflation. Here's what you need to know.
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
-
Another IRS 1099-K Threshold Change to Know for Your 2025 TaxesTax Law After years of uncertainty and changing requirements, the 1099-K reporting rules for 2025 are now set, and the thresholds have changed since last year.
-
IRS 1099-K Threshold for 2025 Taxes Just Changed: What to Know Now
Tax Law After years of uncertainty and changing requirements, the 1099-K reporting rules for 2025 are now set, and the thresholds have changed since last year.
-
Ohio Property Tax Shock: Why Your New Assessment Is So High (And What Comes Next)State Taxes Higher home valuations in Ohio have led to homeowner property tax relief. But is it enough?
-
Florida Residents Could Soon Get Property Tax ReliefProperty Tax The push for a solution to end high property taxes could lead to significant tax cuts in the Sunshine State next year.
-
New Tax Rules: Income the IRS Won’t Touch in 2025Income Taxes From financial gifts to Roth withdrawal rules, here’s what income stays tax-free under the new Trump 2025 tax bill, and some information on what’s changed.
