Michigan Tax Guide
Explore Michigan's 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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
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.
[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.
Beginning in 2026 through 2028, Michigan will allow temporary deductions for tipped income and overtime pay from the 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.
Beginning in 2026 through 2028, certain seniors can take both the standard deduction and the Social Security income deduction. This change applies to taxpayers born after 1952 and are age 67 or order.
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% (1.15% for 2026)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
Starting in 2026, Michigan will remove gasoline and diesel from state sales tax and remove fuel from state use tax. Michigan will also raise the gas and diesel tax from $0.31 to $0.51 per gallon, and continue increased due to inflation.
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) |
Beginning January 1, 2026, Michigan will add a new 24% wholesale tax on cannabis.
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
-
Dow Rises 313 Points to Begin a Big Week: Stock Market TodayThe S&P 500 is within 50 points of crossing 7,000 for the first time, and Papa Dow is lurking just below its own new all-time high.
-
The $3,000 Retirement Mistake Millions Make Each Year (And How to Avoid It)A little oversight or automation can keep money in your pocket.
-
January Fed Meeting: Live Updates and CommentaryThe January Fed meeting is a key economic event, with Wall Street waiting to see what Fed Chair Powell & Co. will do about interest rates.
-
3 Retirement Changes to Watch in 2026: Tax EditionRetirement Taxes Between the Social Security "senior bonus" phaseout and changes to Roth tax rules, your 2026 retirement plan may need an update. Here's what to know.
-
Tax Season 2026 Is Here: 8 Big Tax Changes to Know Before You FileTax Tips Due to several major tax rule changes, your 2025 return might feel unfamiliar even if your income looks the same.
-
Do You Pay Property Taxes in Tennessee? What You Need to Know in 2026Property Taxes State lawmakers are moving to ban state property taxes, but can they stop the local rate spike? Here's how 2026 could lower your Tennessee property tax bill.
-
12 Tax Strategies Every Self-Employed Worker Needs in 2026Your Business Navigating the seas of self-employment can be rough. We've got answers to common questions so you can have smoother sailing.
-
New California Wealth Tax for 2026? Here's What's Happening NowState Taxes California has considered taxing wealth before, but the latest proposal seems to be different.
-
A Free Tax Filing Option Has Disappeared for 2026: Here's What That Means for YouTax Filing Tax season officially opens on January 26. But you'll have one less way to submit your tax return for free. Here's what you need to know.
-
Georgia Tax Rebate And Income Elimination? What 2026 Could Mean For YouState Tax We break down how lawmakers aim to axe the state income tax and how much you could get in a Georgia tax refund in 2026.
-
When Do W-2s Arrive? 2026 Deadline and 'Big Beautiful Bill' ChangesTax Deadlines Mark your calendar: Feb 2 is the big W-2 release date. Here’s the delivery scoop and what the Trump tax changes might mean for your taxes.
