Michigan Wage and Payroll Tax Facts
February 02, 2024
Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Michigan.
Select a state or federal tax guide
Michigan requires minimum wage rates that are slightly higher than those required by the federal government. It also has a few reciprocal agreements with other states to provide tax relief for citizens who work and live in different states.
When it comes to processing payroll, Michigan-based organizations must handle the following taxes in addition to those required by the federal government:
- Personal Income (a.k.a. State Income Tax)
- State Unemployment Insurance (SUI)
- Local Taxes
The below information was last updated January 30, 2024. It is not intended as legal or tax advice.
Michigan Minimum Wage Rates
|
Wage Type |
Michigan Rates |
Federal Rates |
|
Minimum Wage |
$10.33 |
$7.25 |
|
Tipped Minimum Wage |
$3.93 |
$2.13 |
|
Actual Tip Credit |
$6.40 |
$5.12 |
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 |
|
|
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* |
|
|
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.
Michigan Employer Registration
The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Department of Treasury for withholding tax topics and the Unemployment Insurance Agency for unemployment tax topics.
|
Registration Details |
Department of Treasury |
Unemployment Insurance Agency |
|
Phone |
(517) 636-6926 | (855) 484-2636 |
|
Online Registration |
Michigan Treasury Homepage | MiWAM Employer Registration |
|
Registration Instructions |
Online registration is available, and your account numbers are issued during the registration process. | Online registration is available, and your account numbers are issued within three days. |
|
Employer Self-Service Login |
Michigan Treasury Homepage | MiWAM Employer Login Page |
Additional Michigan Payroll Tax Resources
This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.
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