Michigan City Income Tax Rates for All 24 Taxing Cities

Rate Overview

What Are the Michigan City Income Tax Rates?

Michigan city income tax rates fall into four tiers. Detroit charges the most at 2.4% for residents and 1.2% for nonresidents. Highland Park, an enclave surrounded by Detroit, sets its rate at 2.0% for residents and 1.0% for nonresidents. Grand Rapids and Saginaw both charge 1.5% for residents and 0.75% for nonresidents. The remaining 20 cities all charge the standard 1.0% for residents and 0.5% for nonresidents.

Every city follows the same structural rule: the nonresident rate equals half the resident rate. Corporate rates are set by each city; Saginaw, for example, taxes corporations at 1.50%.

These rates have remained stable for several years. Each city levies the tax by ordinance under the Michigan City Income Tax Act, which includes the Uniform City Income Tax Ordinance adopted in 1964. The state does not adjust these rates annually the way it adjusts the state income tax rate.

Complete City List

Which 24 Cities Levy a Local Income Tax?

Only 24 Michigan cities impose a local income tax. If you do not live or work in one of these cities, city income tax does not apply to you.

Large Michigan cities like Ann Arbor, Warren, Sterling Heights, and Kalamazoo do not levy a city income tax. The two most recent additions are Benton Harbor, effective January 1, 2018, and East Lansing, effective January 1, 2019.

Who Pays

Who Must Pay Michigan City Income Tax?

Two groups owe city income tax. First, residents of a taxing city pay the full resident rate on all of their income, no matter where it is earned. A Lansing resident who commutes to a job in a non-taxing suburb still owes Lansing city tax on those wages. Second, nonresidents who physically perform work inside a taxing city owe the nonresident rate, but only on income earned within that city's limits.

Part-year residents split the year. If you moved into or out of a taxing city during the year, you pay the resident rate for the months you lived there and the nonresident rate (if applicable) for the rest. The split is based on the actual dates of your move, not rounded to the nearest month.

Businesses operating within a taxing city also owe city income tax on net profits allocable to that city. S corporations are treated as C corporations for city income tax purposes, which means the entity itself files and pays rather than passing the liability through to shareholders.

Taxable Income

What Income Is Subject to City Tax?

Michigan city income tax applies to three main categories:

• Compensation -- wages, salaries, bonuses, commissions, and tips
• Net profits from a business, profession, or partnership activity conducted in the city
• Rental income from real property located inside the city

The tax base starts from federal adjusted gross income with Michigan-specific modifications. For most W-2 employees, the calculation is straightforward: gross wages minus the city personal exemption times the applicable rate.

Partnerships and LLCs taxed as partnerships pass income through to partners, but the entity must file an informational return with the city if it operates within city limits. Each partner then reports their share on an individual city return. Note that pass-through treatment at the federal or state level does not apply to S corporations at the city level -- those entities file and pay city tax as if they were C corporations.

Exempt Income

What Income Is Exempt from City Tax?

Detroit's withholding guide lists pensions and annuities, worker's compensation and similar benefits among payments that are not subject to city income tax withholding.

Each city sets a personal exemption that reduces city taxable income: $600 in most taxing cities, with higher amounts in some, such as $750 in Battle Creek, $1,000 in Hudson and $3,000 in Grayling. In a $600 city, a married couple filing jointly with two children claims $2,400 in exemptions. It is separate from the Michigan state personal exemption used on the MI-1040.

Detroit Resident Earning $65,000 per Year

City income tax calculation for a single filer with no dependents living and working in Detroit

Employer Withholding

How Do Employers Handle City Tax Withholding?

In Detroit, every employer with a location in the city, or doing business in the city, must withhold city income tax. The employer withholds at the resident rate for employees who live in the city and at the nonresident rate for employees who live outside it.

Detroit's rules reach employers without a Detroit location: an employer doing business in Detroit must withhold, and an employer with locations in and out of Detroit withholds for employees working in Detroit and for Detroit residents working anywhere. In that case, the employee is responsible for making quarterly estimated payments or settling the balance when filing.

Detroit is unique because the Michigan Department of Treasury administers its city income tax directly. The other cities administer their own city income taxes. Employers should verify each employee's home address and work location against actual city boundaries -- not just ZIP codes, which do not always align with municipal limits.

Filing Rules

How Do You File a City Income Tax Return?

Each taxing city has its own return form. Detroit returns are filed with the Michigan Department of Treasury, which administers the Detroit income tax. Other cities set their own due dates; Saginaw returns, for example, are due April 30.

Smaller cities typically publish their own versions of a city 1040 form, often available on the city website or at city hall.

If your employer withheld city tax throughout the year and your only income was W-2 wages, the return is a one-page reconciliation. If you have business income, rental income, or worked in multiple taxing cities, the return becomes more involved. If your city tax is not fully withheld, check your city’s estimated payment rules; Saginaw, for example, treats estimated payments as sufficient when they equal 70% of the current or prior year’s tax.

Remote Work

Does Working Remotely Affect City Income Tax?

Yes. Michigan city income tax is based on where work is physically performed, not where the employer is located. If you live in a suburb and work from home full-time for a Detroit employer, you do not owe Detroit nonresident tax because you never physically work within Detroit city limits. The city has no convenience-of-the-employer rule like New York, so the physical-presence test is the only standard.

The reverse also applies. If you live in Detroit and work remotely from your Detroit home for an employer in a non-taxing city, you still owe Detroit resident tax on all your income because the resident rate applies regardless of where the work is done.

Hybrid arrangements require allocation. An employee who splits time between a Detroit office and a home office in a non-taxing suburb would owe Detroit nonresident tax only on the portion of income earned during days physically present in the city. Keeping a log of work-location days is the simplest way to support that allocation on your return.

Combined Burden

How Do City and State Income Taxes Combine?

Michigan's flat 4.25% state income tax (2026 tax year) applies to all residents regardless of city. The city tax stacks on top. Here is how the combined state-plus-city rate looks for residents of the four rate tiers:

• Detroit: 4.25% + 2.4% = 6.65%
• Highland Park: 4.25% + 2.0% = 6.25%
• Grand Rapids or Saginaw: 4.25% + 1.5% = 5.75%
• Any 1% city: 4.25% + 1.0% = 5.25%
• Non-taxing city: 4.25% + 0% = 4.25%

Federal income tax sits on top of both. A Detroit resident in the 22% federal bracket pays a combined marginal rate of roughly 28.65% before FICA. A resident of a non-taxing Michigan city in the same bracket pays about 26.25%. That gap of 2.4 percentage points on a $65,000 salary works out to roughly $1,560 per year -- a meaningful difference when comparing job offers or deciding where to live in the metro area.

This is general information, not tax advice.