Michigan is a flat taxation state and some cities will impose additional taxes. Income taxes are to be reduced every year by .1% until 2015, when the tax rate will become 3.9%. This is down from a flat tax rate of 4.35%. Tax returns are due on April 15.
Michigan state sales tax – 6%, (food, prescription drugs exempt, home heating fuel taxed at 4%)
Michigan state excise taxes
Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.
- $2.00 per package of 20 cigarettes
- $.48 tax per liter of mixed spirits
- 12% on premise consumption of liquor, 13.85% for off premises consumption
- $6.30 per 31 gallon barrel of beer
- $.135 per liter of wine, $.20 for alcohol over 16%.
- $.19 a gallon on gasoline, $.12 if gasoline contains ethanol
- $.15 a gallon on diesel, $12 if biodiesel
Michigan inheritance tax
There are no longer taxes on inheritance and estates in Michigan. Only federal laws are in effect.
Michigan payroll taxes
State Disability Insurance – noneState Unemployment Insurance – .06% to 11.05%, wage base is $9,000. Employer contribution is 2.70% but if the employer is a construction firm that rate is 7.9%State minimum wage is $7.40
Michigan state property tax
Property tax is local and depends on the city or county in Michigan. The country assessor will determine the value of the property, usually 50% of its cash value. Property taxes can be delayed by the disabled, veterans, spouses of veterans and farmers. The homestead program, known as the Homeowner’s Principal Residence Exemption Program will exempt the homeowner from taxes, such as local school taxes. There are additional credits for those households making under $82,650
There are personal exemptions from taxation that total $3,600 for individuals and $7,200 for couples. Dependents are subject to a $2,300 exemption and seniors can claim a $2,300 exemption.
Private pension income exclusion stands at $45,120 or $90,240 for married couples. Those over 65 may also receive exemptions from taxation on income from interest, dividends and capital gains, up to $10,058 for individuals or $20,115 for married joint filers. Many public pensions are completely exempt from state taxation.
Military retirement pay is not taxed. This includes benefits passed to the surviving spouse. Military disability and veteran’s pensions are almost always exempt from federal and Michigan state taxation.
Corporate income tax
The newest form of Michigan corporate taxes go into effect on Jan 1, 2012, exempt sole proprietorships, and pass through entities from taxation. Corporations making under $350,000 in gross profits, sourced in Michigan, are exempt from taxation. All other corporations will be subject to a 6% tax rate on federal taxable income. Insurance companies pay 1.25% of gross direct premiums and financial institutions pay .20% of net capital to Michigan. Businesses must separate Michigan sales from other sales for the purposes of taxation.