What is the Michigan sales tax rate?

The combined state + average local sales tax rate is about 6.00%.

How are capital gains taxed in Michigan?

Michigan taxes long-term capital gains at roughly 4.25%, on top of federal LTCG and 3.8% NIIT.

Is retirement income taxed in Michigan?

Partial exemption (age / income limits apply). Specific exclusions vary by age and AGI.

What is the property tax rate in Michigan?

The average effective property tax is 1.38% of assessed value. Local rates vary widely by county and city.

Does Michigan tax Social Security?

Social Security may be taxed depending on AGI and filing status. Check current-year exclusions with the Michigan Department of Revenue.

What filing deadlines apply in Michigan?

Michigan follows the federal April 15 deadline. Extensions are typically granted on request — see the state DOR for current forms.

Are pension distributions taxable in Michigan?

Partially. Many states exclude part of pension income based on age or AGI; verify the current-year threshold.

Does Michigan have an estate or inheritance tax?

Federal estate tax applies above the unified credit; only a handful of states levy their own estate or inheritance tax. Verify current rules with a CPA.

Is the standard deduction the same as federal?

Most states allow a separate state standard deduction or personal exemption. The federal standard deduction is $16,100 single / $32,200 MFJ for 2026.

Can I deduct state taxes on my federal return?

Yes — state + local taxes (SALT) are deductible up to $10,000 if you itemize. The cap is set in current law through 2025; check 2026 status before filing.

Does Michigan accept the federal EITC?

Many states offer a state EITC matched as a percentage of the federal credit. Eligibility tracks the federal rules.

Are there local income taxes in Michigan?

Michigan generally does not impose local income taxes beyond the state rate.

Where can I find official Michigan tax forms?

Visit the Michigan Department of Revenue or Department of Taxation site for current forms, brackets, and credits.

How often does TaxEase update this guide?

Annually after IRS Revenue Procedures publish, and within 14 days for any major state legislative change. See our Editorial Policy.

Michigan Tax Guide 2026

Everything residents of Michigan need to know about state taxes in 2026 — income brackets, property tax, sales tax, capital gains, retirement, and small-business taxation, with planning tips aligned to current IRS guidance.

At a glance

Income tax system

Flat-rate income tax

Effective income rate

4.25%

Capital gains

4.25%

Property tax

1.38%

Combined sales tax

6.00%

Retirement income

Partial exemption (age / income limits apply)

Income tax

Michigan uses a flat-rate income tax. The average effective rate on wage income is 4.25%. Federal tax still applies; see our income tax calculator for a full breakdown.

Property tax

Effective property tax averages 1.38% of assessed home value. On a $400,000 home that is roughly $5,520 per year. Run your own number with the property tax calculator.

Sales tax

Combined state + local sales tax averages 6.00%. Some categories (groceries, prescription drugs, clothing) may be exempt or taxed at a lower rate.

Capital gains

Michigan taxes long-term capital gains at approximately 4.25%. Federal rates of 0/15/20% plus 3.8% NIIT above MAGI thresholds apply on top.

Estimate yours with the capital gains calculator.

Retirement taxation

Partial exemption (age / income limits apply). Adjust contributions in our calculators to model the impact of pre-tax 401(k) / Traditional IRA contributions on your Michigan liability.

Business taxation

Flat 4.25% individual; phasing out retirement-income tax through 2026.

Michigan tax credits & deductions

Earned Income Tax Credit (state match)
Child & Dependent Care credit
Residential energy credit

Eligibility usually depends on AGI, filing status, and residency. Verify current-year rules with the Michigan Department of Revenue or a CPA.

Planning tips for Michigan residents

Maximize pre-tax retirement contributions to reduce state taxable income.
Bunch itemizable deductions into a single year when above the standard deduction.
Time long-term capital gains for years of lower other income.