Flat-Fee Tax Preparation for Michigan Residents

Michigan has a flat income tax rate of 4.25%, with a TABOR-like mechanism that may reduce the rate in years when state revenues grow above a threshold

Michigan cities including Detroit (2.4% residents / 1.2% non-residents), Grand Rapids, Lansing, and others impose local income taxes on top of the state rate

The MI pass-through entity tax election allows eligible S-corps and partnerships to pay MI income tax at the entity level for SALT cap planning

Michigan's real estate transfer tax is $3.75 per $500 of value ($7.50 per $1,000) at the state level plus county transfer taxes — a moderate transactional cost

Michigan does not tax Social Security benefits, and pension income from government sources (military, federal, and some state/local government pensions) is exempt from MI tax

MI does not impose a state estate tax or inheritance tax — a favorable aspect for estate planning

Michigan's homestead property tax credit provides relief for MI residents whose property taxes exceed a threshold relative to income

Detroit has significant distressed property investment activity with specific property tax incentive programs including NEZ (Neighborhood Enterprise Zone) exemptions

Michigan Real Estate Tax

Michigan's real estate market ranges from Detroit's urban redevelopment opportunities to lakefront vacation properties in the Upper and Lower Peninsulas. The state transfer tax plus county taxes create moderate transactional costs. Detroit's NEZ and other property tax incentive programs create specialized planning for urban investors. Vacation rental income in lake communities is taxable at MI rates.

Michigan Business Tax

Michigan businesses benefit from a flat income tax rate and no estate tax. City income taxes in Detroit and other municipalities add compliance complexity for businesses with employees in those cities. The MI PTET election provides SALT cap relief. Michigan's manufacturing heritage creates specific depreciation and personal property tax considerations for industrial businesses.

Do I need to file a Michigan state tax return?

If you are a Michigan resident or earned MI-source income above the filing threshold, you must file a MI 1040. Michigan residents are taxed on worldwide income at the flat 4.25% rate. If you live or work in a MI city that imposes a local income tax (Detroit, Grand Rapids, etc.), you must also file a city return for that city.

Does Michigan tax Social Security or pension income?

Michigan does not tax Social Security benefits. For pension income, the treatment depends on when the pension was earned and the type of pension. Government pensions (military, federal, and certain state/local) have favorable treatment. Private pensions and IRA distributions may be partially or fully taxable depending on your age and the tier system MI uses — taxpayers born before 1946 have the most favorable treatment.

What is Detroit's city income tax?

Detroit imposes a city income tax of 2.4% on residents and 1.2% on non-residents who work in Detroit. If you live in Detroit, you owe 2.4% on all your taxable income. If you live outside Detroit but earn wages in Detroit, you owe 1.2% on those wages. Detroit city returns are filed separately from the state MI 1040. Other Michigan cities — including Grand Rapids, Lansing, Flint, and others — also impose city income taxes at lower rates.

What makes Michigan taxes unique?

Michigan's combination of a flat state income tax, city income taxes in Detroit and other municipalities, no estate tax, and favorable treatment of Social Security and certain pension income creates a distinctive environment. The TABOR-like mechanism that can reduce the state rate in certain revenue years is unusual and has resulted in modest rate reductions in recent years.