Michigan Wage and Payroll Tax Facts
August 1, 2023
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.
Michigan requires minimum wage rates that are slightly higher than those required by the federal government. Additionally, there are over a dozen local minimum wage rates specifically for contractors across the state’s various cities and counties. For the most part, these contractor-specific rates adjust based on whether the employer offers their employees health benefits.
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 income taxes
The below information was last updated July 28, 2023. It is not intended as legal or tax advice.
Michigan Minimum Wage Rates
|
Wage Type |
Michigan Rates |
Federal Rates |
|
Minimum Wage |
$10.10 |
$7.25 |
|
Tipped Minimum Wage |
$3.84 |
$2.13 |
|
Actual Tip Credit |
$6.26 |
$5.12 |
|
Wage Type |
Michigan Rates |
Federal Rates |
|
Minimum Wage |
$10.10 |
$7.25 |
|
Tipped Minimum Wage |
$3.84 |
$2.13 |
|
Actual Tip Credit |
$6.26 |
$5.12 |
Local Minimum Wage Rates for Contractors
In addition to the state-wide minimum wage rates above, some cities have unique minimum wage rates for contractors:
|
Location |
Wage Rate |
| Ann Arbor |
$12.70 (with health benefits) |
| Eastpointe |
$11.18 (with health benefits) |
| Ferndale |
$9.69 (with health benefits) $11.12 (without health benefits) |
| Hazel Park |
100% of the federal poverty level (with health benefits) |
| Ingham County |
$15.38 (without health benefits)* |
| Lansing |
$15.19 |
| Pittsfield Charter Township |
$11.05 (with health benefits) |
| Southfield |
$11.78 (with health benefits) |
| Taylor |
$10.60 (with health benefits) |
| Warren |
$12.15 (with health benefits) |
| Washtenaw County |
$13.13 (with health benefits) |
| Wayne County |
100% of the federal poverty level (with health benefits) |
| Ypsilanti |
$10.10 |
| Ypsilanti Township |
$10.88 (with health benefits) |
|
Location |
Wage Rate |
| Ann Arbor |
$12.70 (with health benefits) |
| Eastpointe |
$11.18 (with health benefits) |
| Ferndale |
$9.69 (with health benefits) $11.12 (without health benefits) |
| Hazel Park |
100% of the federal poverty level (with health benefits) |
| Ingham County |
$15.38 (without health benefits)* |
| Lansing |
$15.19 |
| Pittsfield Charter Township |
$11.05 (with health benefits) |
| Southfield |
$11.78 (with health benefits) |
| Taylor |
$10.60 (with health benefits) |
| Warren |
$12.15 (with health benefits) |
| Washtenaw County |
$13.13 (with health benefits) |
| Wayne County |
100% of the federal poverty level (with health benefits) |
| Ypsilanti |
$10.10 |
| Ypsilanti Township |
$10.88 (with health benefits) |
*Up to 125% of the federal poverty line. If the employer does provide health benefits, that cost may account for up to 20% of this wage rate.
**For contractors with a service contract of $10,000 or more annually, or any company receiving financial assistance or a tax reduction of $10,000 or more annually.
These rates apply to the following employer types:
Ann Arbor
- All city contractors providing services with a value of at least $10,000 per year, and recipients of any financial assistance that exceeds $10,000.
Eastpointe
- All city service contractors receiving more than $5,000.
Ferndale
- Contractors providing services with a value of at least $25,000.
Hazel Park
- Contractors or recipients of financial subsidies from the city that receive more than $50,000 from the city in a year.
Ingham County
- All county service contractors receiving more than $50,000 per year that employ five or more employees, and county service subcontractors receiving more than $25,000 per year that employ five or more employees.
Lansing
- All city contracts with the city of Lansing (including subcontracts) that exceed $50,000 annually.
Pittsfield Charter Township
- Contractors providing services with a value of at least $10,000 a year, and persons or entities receiving any financial assistance from the township exceeding $10,000 a year.
Southfield
- Service contractors receiving at least $50,000 a year.
Taylor
- All city service contractors receiving at least $50,000 a year.
Warren
- All city service contractors receiving at least $50,000 a year.
Washtenaw County
- Employers who hold professional service or service contracts with Washtenaw County for a value of more than $10,000 in a twelve-month period of time.
Wayne County
- Contractors or recipients of financial subsidies from the city that receive more than $50,000 from the city in a year.
Ypsilanti
- Contractors with two or more employees.
Ypsilanti Township
- Contractors providing services with a value of at least $10,000 per year.
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. Nonresidents from Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin who work in Michigan aren’t required to pay SIT since these states are granted reciprocity.
|
Additional Michigan SIT Details |
|
|
Valid Filing Statuses |
N/A |
|
Exemptions |
|
|
Form W-4 |
Form MI-W4 |
|
Reconciliation Frequency |
Annual |
|
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 |
2.70%* |
|
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 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%* |
|
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 only pay taxes in the state where they live, not the state where they work. 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)
Michigan doesn't require employers to collect PSL taxes, but the state does have the following program under its Paid Medical Leave Act (PMLA):
|
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 |
| FAQ | PMLA FAQs |
|
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 |
| FAQ | PMLA FAQs |
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 |
Unemploment Insurance Agency |
|
Phone |
(517) 636-6926 | (855) 484-2636 |
|
Online Registration |
https://mto.treasury.michigan.gov/eai/mtologin/authenticate?URL=/ | https://miwam.unemployment.state.mi.us/mip/ereg/_/ |
|
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 |
https://mto.treasury.michigan.gov/eai/mtologin/authenticate?URL=/ | https://miwam.unemployment.state.mi.us/EmpMiWAM/_/ |
|
Registration Details |
Department of Treasury |
Unemploment Insurance Agency |
|
Phone |
(517) 636-6926 | (855) 484-2636 |
|
Online Registration |
https://mto.treasury.michigan.gov/eai/mtologin/authenticate?URL=/ | https://miwam.unemployment.state.mi.us/mip/ereg/_/ |
|
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 |
https://mto.treasury.michigan.gov/eai/mtologin/authenticate?URL=/ | https://miwam.unemployment.state.mi.us/EmpMiWAM/_/ |
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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