Michigan's unique system
Why can Detroit charge more than other Michigan cities?
Michigan's Uniform City Income Tax Ordinance sets caps on city income tax rates. Most cities are limited to 1% for residents and 0.5% for nonresidents. However, Michigan law grants a special exception to Detroit as the state's largest city, allowing rates up to 2.5% for residents and 1.25% for nonresidents. Detroit currently uses most of this allowance at 2.4%/1.2%.
About two dozen Michigan cities levy a city income tax. Some of the more prominent ones include Grand Rapids, Flint, Lansing, Pontiac, Saginaw, and Battle Creek. All of these are at the standard cap: 1% resident / 0.5% nonresident. Only Detroit and (historically) Highland Park and Hamtramck have received enhanced authorization, though none match Detroit's rates.
How is the tax calculated and filed?
The Detroit city income tax is a flat percentage of taxable income — no graduated brackets. For residents, the base is all taxable income (wages, self-employment, some investment income). For nonresidents, the base is only wages and self-employment income earned within Detroit city limits.
Since 2015, individual returns are filed with the Michigan Department of Treasury rather than with the City of Detroit directly. You file:
- Form 5118 — Detroit Resident Income Tax Return
- Form 5119 — Detroit Nonresident Income Tax Return
These are submitted alongside your Michigan state return. Employers withhold the city tax from paychecks, and any over- or under-withholding is reconciled when you file.
What does the combined tax burden look like?
A Detroit resident pays city tax on top of Michigan's flat 4.25% state income tax, federal income tax, and FICA. The combined state and local rate alone is 6.65% before federal taxes enter the picture.
Worked example: $65,000 salary, single filer, Detroit resident
| Tax layer | Approximate amount |
|---|---|
| Federal income tax | ~$7,200 |
| FICA (employee share) | ~$4,970 |
| Michigan state income tax (4.25%) | ~$2,763 |
| Detroit city income tax (2.4%) | ~$1,560 |
| Estimated take-home | ~$48,507 |
Illustrative example using approximate 2025/2026 federal brackets and MI flat rate. Use our Detroit take-home calculator for a personalized estimate.
What about remote workers and the city tax?
The resident vs. nonresident distinction matters here:
- Detroit residents owe the 2.4% rate on all income, regardless of where they physically perform the work. Working from home in Detroit or commuting to a suburban office — the resident rate applies to everything.
- Nonresidents owe the 1.2% rate only on income earned within Detroit city limits. If a nonresident works from home in the suburbs and never sets foot in a Detroit office, those remote-work days should not be subject to Detroit city tax.
If your employer withholds Detroit city tax on your entire paycheck but you worked from home outside the city for part of the year, you can allocate income based on days worked in Detroit vs. outside and claim a refund for the over-withholding on your Form 5119.
What if your employer is not withholding correctly?
Detroit employers are required to withhold the city tax. If you notice your paycheck does not reflect city tax withholding, or if the wrong rate is being applied:
- Verify with your payroll department that they have your correct home address on file.
- Confirm the employer is registered with the Michigan Department of Treasury for Detroit city tax withholding.
- If the employer does not withhold, you must make estimated payments directly to the Michigan Department of Treasury using Form 5123 to avoid penalties.
What happens when you move into or out of Detroit mid-year?
Michigan city income tax is based on your resident status for each portion of the year. If you move into Detroit in June, you are a part-year resident. From January through May you pay the nonresident rate (1.2%) on any Detroit-source wages. From June through December you pay the resident rate (2.4%) on all earned income.
If you move out of Detroit, the reverse applies: you switch from resident to nonresident from your move date. File both Form 5118 (for the resident period) and Form 5119 (for the nonresident period), or use the part-year allocation sections within the forms. The Michigan Department of Treasury processes both alongside your state return.
Notify your employer immediately when you move so they adjust withholding to the correct rate. The difference between 2.4% and 1.2% adds up quickly on a moderate salary.
What income does Detroit exempt from city tax?
Detroit's city income tax applies to a broad range of earned income, but several categories are exempt:
- Social Security benefits — fully exempt from Detroit city tax
- Pensions and retirement income — generally exempt, though some non-qualified distributions may be taxable
- Interest and dividends — for nonresidents, these are exempt; for residents, the treatment depends on the income type
- Military pay — exempt for nonresidents stationed in Detroit under the Servicemembers Civil Relief Act
- Workers' compensation — exempt
The distinction between Detroit and Ohio cities matters here: Detroit (under Michigan law) taxes a somewhat different income base than Ohio's municipal tax, which is strictly limited to earned income. If you have complex income sources, review the Form 5118 instructions for the complete list of inclusions and exclusions.
Questions
Detroit city income tax FAQ
What is the Detroit city income tax rate?
Detroit's city income tax rate is 2.4% for residents and 1.2% for nonresidents. These are the maximum rates allowed by Michigan law for the state's largest city. Detroit is the only Michigan city authorized to charge up to 2.5% — all other Michigan cities with a city tax are capped at 1% for residents and 0.5% for nonresidents.
Do I pay Detroit city tax if I live in the suburbs and commute?
Yes. If you work within Detroit city limits, you owe the nonresident rate of 1.2% on your Detroit-source wages. Your employer should withhold this from your paycheck. This is separate from Michigan state income tax, which you also owe.
How do I file Detroit city income tax?
Since 2015, individual Detroit city income tax returns are filed with the Michigan Department of Treasury, not with the city directly. You file Form 5118 (City of Detroit Resident Income Tax Return) or Form 5119 (City of Detroit Nonresident Income Tax Return) alongside your Michigan state return.
Which other Michigan cities have a city income tax?
About two dozen Michigan cities levy a city income tax. Besides Detroit, some of the larger ones include Grand Rapids, Flint, Lansing, Pontiac, Saginaw, Highland Park, Hamtramck, Muskegon and Battle Creek. All non-Detroit cities are capped at 1% for residents and 0.5% for nonresidents.
Can remote workers avoid Detroit city tax?
If you are a nonresident and you work remotely from your home outside Detroit, you generally do not owe the nonresident city tax on those remote-work days because you are not performing services within Detroit city limits. However, if you are a Detroit resident, you owe the resident rate on all income regardless of where you work.
- Sources: Michigan Dept. of Treasury · MCL 141.501–141.787 · City of Detroit.
- Last updated July 31, 2026
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