Michigan Tax Calculator: Estimate Your Taxes
Warning: Calculations are estimates based on December 2021 tax rates and Tax Foundation data. These rates are subject to change. Check the IRS website for the latest income tax information and your state’s tax website for state-specific information. Our calculator does not take into account 401k and IRA deductions due to tax law limitations. Please note that the amount of your IRA deductions may vary. You should speak with a tax professional to determine your tax situation.
What You Need to Know About Michigan State Taxes
The State of Michigan requires you to pay taxes whether you are a resident or a non-resident who receives income from a Michigan source. The state income tax rate is 4.25% and the sales tax rate is 6%.
Michigan Income Tax Brackets and Rates
Michigan has a flat tax rate of 4.25% for 2021, which means everyone pays the same income tax regardless of income.
Michigan Income Tax Deductions
Level 1 Michigan Standard Deduction
Taxpayers born before 1946 may be eligible for the Michigan Level 1 Standard Deduction, which applies to pension and retirement benefits up to $54,404 for single filers and up to $108,808 for taxfilers jointly.
Level 2 Michigan Standard Deduction
Taxfilers born between 1946 and 1952 may be eligible for Michigan’s standard Tier 2 deduction, worth $20,000 for single filers and up to $40,000 for joint filers.
Michigan Tier 3 Standard Deduction
Taxfilers born in 1953 and 1954 may be eligible for Michigan’s standard Tier 3 deduction, worth $20,000 for single filers and up to $40,000 for joint filers.
Michigan 529 Contribution Deduction
Contributions to Michigan Education Savings Program (MSEP), MI 529 Advisor Plan (MAP), and Michigan Achieving a Better Life Experience Program (MiABLE) 529 accounts can be deducted. Deductions for these contributions are capped at $10,000 for single filers and $20,000 for joint filers. For MESP and MAP accounts, the maximum deduction is $5,000 combined for a single taxpayer and $10,000 combined for couples filing jointly. The same cap applies to MiABLE accounts.
Michigan Education Trust Deduction
You can deduct contributions you made to a Michigan Education Trust (MET) 529 prepaid tuition contract, including charitable contributions to the MET’s charitable tuition program.
Michigan State Income Tax Credits
Home heating tax credit
Michigan residents who meet certain conditions can apply for a credit to help cover heating costs. Partial-year residents are eligible, but students who are declared dependents of someone else, residents of college or university-operated housing, and those living in licensed care facilities are generally only eligible. not eligible.
Standard credit has a maximum income limit of $39,157 and a maximum allowance of $1,371 (unless you qualify for certain exemptions). The calculation of the alternative credit, which uses your heating costs to determine the amount of your credit, has an income cap of $27,700.
You must complete the Home Heating Credit Application Form MI-1040CR-7 to determine your eligibility. The deadline for this submission is September 30, 2022.
Michigan Income Tax Credit (EITC)
If you request an EITC on your federal tax return, you can also request one on your Michigan tax return. The Michigan EITC is equal to 6% of your federal credit.
the federal income limit EITC ranges from $21,430 to $57,414 depending on how you file and how many children or dependents you claim. The maximum amount of federal EITC you can claim on your 2021 tax return is $6,728.
For example, if you qualify for $3,000 federally, you can claim $180 through the Michigan EITC.
Do I have to pay income taxes in Michigan?
You are required to file a Michigan tax return if you have income from a Michigan source. This applies whether you are a full-time or part-time resident, or live elsewhere but earn income from a Michigan-based source.
Residence status
You are considered a resident if:
- You reside in Michigan full-time
- You reside in Michigan for part of the year
Michigan residents who earn income in Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin need only pay Michigan income tax on that income.
Sales tax and sales tax rate
Michigan charges a 6% sales tax. This is a statewide sales tax and Michigan does not have separate rates by city or county.
Property taxes and property tax rates
Property taxes are determined locally.
Capital gains tax
Michigan taxes capital gains at the same rate as other income, 4.25%.
Seniors born before 1946 can deduct interest, dividends and capital gains on their tax return. For 2021 taxes, the maximum deduction for single filers is $12,127 and the maximum deduction for joint filers is $24,254.
Inheritance and Inheritance Tax
Michigan does not have an estate or inheritance tax.
Homestead property tax credit
If you own property in Michigan and live in the state at least half of the year, you may be eligible for the homestead property tax credit. The credit is available to taxpayers whose total household resources are less than $60,600.
Total household resources include income, capital gains, and other money you have received. See page 27 for instructions for Michigan Form 1040 for a full list of what is included in total household resources.
If the assessed value of your property exceeds $136,600, you are not eligible for the credit.
Rent credit
Michigan offers a tax credit for rent paid by residents. Twenty-three percent of the amount you paid for rent is considered property tax and you can claim it on your tax return. Your total household resources must be $60,600 or less to claim the credit.
An alternative credit is available for seniors aged 65 and over who pay more than 40% of their total household resources in rent. The maximum credit for senior tenants is $1,500.
