Michigan Wage and Payroll Tax Facts

Michigan State Income Tax (SIT) Rates

Michigan has a flat income tax rate of 4.25%, meaning all residents pay the same amount regardless of their income levels. 

Additional Michigan SIT Details
Valid Filing Statuses	N/A
Exemptions	Claimed special allowances Any services or individuals not subject to withholding under the Internal Revenue Code Nonresident employees of interstate carriers
Form W-4	Form MI-W4
Reconciliation Frequency	Annual

Michigan State Unemployment Insurance (SUI) Rates

SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.

Michigan SUI Tax Details
Taxable Wage Base	$9,500
Employee Subject to Tax	No
Rates for Experienced Employers	0.06% - 10.30%
Rates for New Employers*	2.70% 6.90% (construction employers only)
Effective Period	Calendar Year
Voluntary Contributions Allowed	Yes; due within 30 days of the mailing of annual tax notices or within 120 days after the beginning of the calendar year, whichever is earlier.

*Michigan uses a Chargeable Benefits Component (CBC) to assist with calculating unemployment taxes based on the amount of unemployment benefits charged to an employer over a 36-month period. In their second year of business, all new employers (including construction) must pay 2/3rds of their CBC on top of the rate listed above.

Michigan State Disability Insurance (SDI) Rates

SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Michigan, however, doesn't require employers to collect an SDI tax.

Miscellaneous Michigan Tax Information

Reciprocal Agreement(s)

Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. Michigan currently has reciprocal agreements with the following states:

• Illinois
• Indiana
• Kentucky
• Minnesota
• Ohio
• Wisconsin

Michigan-based employers don’t have to withhold Michigan SIT for residents of these states, and employers in these states don’t have to withhold Michigan SIT for Michigan residents that work in their state.

Michigan residents working in a reciprocal state must furnish and file certificates of non-residence with their employer to be exempt from the state’s withholdings. 

Paid Sick Leave (PSL) Taxes

The state of Michigan doesn't require employers to collect PSL taxes, but it does have a program providing such leave to employees:

Michigan PSL Details
Covered Employers	Any employer with 50 or more employees
Accrual Method(s)	One hour for every 35 hours worked
Carryover Maximum	40 hours
Annual Accrual Maximum	40 hours per 12-month period
Frontloading Allowed	Yes; 40 hours at the beginning of each year
FAQs	Paid Medical Leave Act (PMLA) FAQs

Paid Family and Medical Leave (PFML) Taxes

The state of Michigan doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.

Local Taxes

In addition to the state-wide taxes mentioned above, two dozen cities in Michigan have local income taxes for their residents. Rates for these taxes vary by location, but the state’s Department of Treasury has a dedicated City Income Tax Forms page with more information for each area.