Michigan Tax Filing: Flat Tax, Credits and City Income Tax

Updated October 16, 2026

A flat tax with a federal starting point

Michigan adopted its individual income tax in 1967. The Michigan Legislature's Taxpayer's Guide describes it as a direct flat-rate tax. Everyone is assessed the same rate, no matter their income level. Look at the current instructions for the rate that applies to your tax year.

The math works like this:

1. Start with adjusted gross income from your federal return.
2. Add and subtract the items Michigan treats differently, listed on Michigan Schedule 1.
3. Subtract exemptions for yourself and each dependent. Extra exemptions exist for household members who are deaf, blind or disabled, for each disabled veteran, and for the parent of a stillborn child.
4. Multiply the result by the flat rate, then subtract credits.

That order matters. Deductions come off income before tax. Credits come off after.

What Michigan adds back and subtracts

Michigan counts some items that the federal return does not, and ignores some that it counts. The Guide lists the main ones.

• Subtractions: Social Security benefits in federal income, military and National Guard retirement, railroad retirement, pay for active duty, income from U.S. government obligations, and contributions to a Michigan 529 savings account or an ABLE account.
• Additions: interest and dividends from other states' bonds, and the federal deduction for taxes measured by income, including the self-employment tax.
• Age-based rules: The retirement and pension subtraction depends on your age, and a 2023 law made significant changes. The Guide tells you to read the current MI-1040 instructions.

Self-employed workers should notice the add-back. The federal deduction for self-employment tax does not carry over to Michigan income. A preparer who knows this will not miss it.

Filing, extensions and paying on time

The Guide says the Michigan Department of Treasury encourages e-file because it cuts errors and gets refunds out faster. If you owe, you can file electronically early, but you do not have to send the payment until the due date. For the most recent season, Michigan's date matched the federal April 15. Check Treasury's page for this year's date.

• Extension. The Guide says you may request an extension of 180 days to file. A federal extension automatically extends the Michigan filing time.
• Not time to pay. Interest and penalties accrue during the extension. If you cannot pay in full, Treasury accepts late or partial payments.
• Combat zone. The MI-1040 has a box for people eligible for a federal combat zone extension.

Read our extension guide for the federal side, and the IRS rule that an extension to file is not an extension to pay. The tax deadlines page keeps the dates together.

City income taxes, nonresidents and reciprocity

Michigan has a City Income Tax Act. It lets cities impose an income tax and allows the state to collect and administer the tax. So the answer to whether you owe a city tax depends on the city where you live or work. Ask your city or Treasury before you assume you do not.

For work across state lines, Michigan law lets Treasury sign reciprocal agreements. If another state does not tax Michigan residents on pay for services in that state, Michigan may exempt that state's residents on pay for services in Michigan. Ask Treasury for its list of states before you assume you are covered.

Part-year residents and nonresidents use Michigan Schedule NR with the MI-1040. Michigan also gives a credit for income taxes paid to governments outside Michigan, which is its main nonrefundable credit.

Michigan credits that can pay you

Michigan has several refundable credits, which can go beyond zero and become a refund.

• Homestead property tax credit. It compares your household resources to the property tax or rent on your Michigan homestead. Renters count too, because the Guide says they pay property tax indirectly through rent. You may have only one homestead.
• Home heating credit. You can file it later in the year, and it does not require you to submit the income tax form.
• Earned income tax credit. Michigan has its own version.
• Farmland preservation credit. It applies to qualifying farmland.

Household resources include nontaxable income, such as an inheritance or life insurance proceeds. Do not leave them off the credit form because they were off your federal return.

Leaving Michigan for Florida

Michigan treats a mover as a part-year resident, so you file the MI-1040 with Schedule NR for the move year. Keep your move date, your last Michigan pay statements and any Michigan rental or business income records. Our Michigan to Florida guide walks through the steps and how to show your new home.

Do not forget the refundable credits. A homestead credit claim for a home you left partway through the year follows its own part-year rules, shown on the credit forms.

Paperwork and mistakes that slow a Michigan return

• Copying federal totals. Michigan adds and subtracts items. Use Schedule 1.
• Missing the self-employment add-back. It is easy to miss when you start from the federal return.
• Skipping the retirement forms. The age-based pension rules need the Pension Schedule.
• Underreporting household resources. The homestead credit counts nontaxable income too.
• Paying late during an extension. Interest and penalties start after the original date.

If you are self-employed, see our estimated tax guide. The IRS says self-employed people generally must make federal estimated payments when they expect to owe tax.

Filing from Michigan with Zero Fuss Taxes

We prepare returns remotely from our Longwood, Florida office for clients in all 50 states, so you never need to visit. A real preparer reviews and signs your return, and you start with a free quote.

FAQ

Nearby state guides

Sources

• legislature.mi.gov/publications/TaxpayerGuide.pdf
• legislature.mi.gov/Laws/MCL?objectName=mcl-206-51
• legislature.mi.gov/Laws/MCL?objectName=mcl-206-30
• legislature.mi.gov/Laws/MCL?objectName=mcl-206-256
• legislature.mi.gov/Laws/MCL?objectName=mcl-Act-284-of-1964
• irs.gov/filing/individuals/when-to-file
• irs.gov/businesses/small-businesses-self-employed/estimated-taxes

General information, not tax advice for your specific situation. Rules can change, so check the official sources below. Zero Fuss Taxes is a PTIN-holding tax preparation firm. We are not a CPA firm, enrolled agents or attorneys.