Michigan state income tax
Michigan has a state income tax. It is flat, with a top marginal rate of 4.25%. Flat tax of 4.25% applied uniformly to all individual and fiduciary income. Rate is set by MCL 206.51 and is subject to an annual formulaic reduction (only) when general fund revenue growth outpaces inflation; Treasury determined no reduction applied for the 2026 tax year, so the rate holds at 4.25%. Capital gains are taxed as ordinary income (no special lower rate).
Does Michigan have a state income tax?
Yes. Michigan taxes individual income on a flat schedule topping out at 4.25%. Flat tax of 4.25% applied uniformly to all individual and fiduciary income. Rate is set by MCL 206.51 and is subject to an annual formulaic reduction (only) when general fund revenue growth outpaces inflation; Treasury determined no reduction applied for the 2026 tax year, so the rate holds at 4.25%.
| Item | Michigan |
|---|---|
| State income tax | Yes, flat |
| Top marginal rate | 4.25% |
| Capital gains | Taxed as ordinary income, up to 4.25% |
| State sales tax | 6% |
| Avg. property tax rate | 1.18% of home value |
| Estate / inheritance tax | None |
How does Michigan tax capital gains?
Michigan has no separate, lower rate for capital gains. They are taxed as ordinary income at the same rates as your wages, up to 4.25%, on top of federal capital gains tax. See how capital gains tax works in 2026.
What about retirement income in Michigan?
Retirement income is taxed differently from wages in many states. For how Michigan treats Social Security, pensions, and 401(k)/IRA withdrawals, see Michigan retirement taxes.
Sources
- Michigan income tax rates and brackets: Michigan Department of Revenue / Taxation.
- Michigan capital gains treatment: Michigan tax authority.
- Michigan sales tax: Michigan Department of Revenue.