Michigan Tax 2025: Guide to Income, Sales, Property, and Retirement Taxes

Photo of the Michigan state flag blowing in the wind in front of a sunrise for a Michigan state tax article.

(Image credit: Getty Images)

last updated 16 May 2025

Navigating the complexities of state taxes can be daunting, but understanding Michigan's tax landscape is essential for residents and newcomers alike.

In this guide, we'll explore key components of Michigan's tax system, from income and sales taxes to property taxes and retirement benefits.

Michigan state tax: Overview

In Michigan, you’ll notice that property taxes can be on the higher side, and the state’s fuel taxes are also steeper than in many others. But when it comes to income tax, Michigan keeps it pretty straightforward with a flat 4.25% rate.

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That said, some cities add their own taxes, so the rate can vary depending on where you live.

On a more positive note, Michigan’s sales tax is relatively low, which helps make everyday purchases a little less taxing.

In the news: Michigan will continue phasing out its retirement income tax this year. Michiganders born between 1946 and 1966 can deduct up to 75% of their retirement and pension income. The initiative is part of the broader Lowering MI Costs Plan to fully exempt most retirement income by 2026.

[Data for this state tax guide was gathered from a number of sources including the U.S. Census Bureau, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]

Michigan income tax rate

Michigan has a flat 4.25% individual income tax rate.

Michigan Retirement Taxes

Social Security: Not taxable
Pensions: Partially taxable (Military pensions are tax-exempt)
401(k) and IRA Distributions: Partially taxable
Military pensions and Railroad Retirement benefits are exempt in Michigan.

Michigan sales tax

Still life of a small shopping cart with $1 USD bills

Michigan's sales tax rate is 6%. There are no local taxes.

Groceries: Exempt, but prepared food is taxable
Clothing: Taxable
Motor Vehicles: Taxable
Prescription Drugs: Exempt

How much is property tax in Michigan?

In Michigan, the property tax rate paid as a percentage of assessed value is 1.24% according to the Tax Foundation.

Michigan gas tax

rendering of a yellow car against a yellow background

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Product	Tax
Gasoline	$0.19 per gallon
Disel	$0.15 per gallon

Source: The Sales Tax Handbook

Michigan taxes on alcohol and tobacco

Michigan tobacco taxes

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Product	Tax
Cigarettes	$2 per pack
Other Tobacco Products	32% of wholesale price
Medical Marijuana	6%
Recreational Marijuana	16% (6% cannabis sales tax plus 10% state excise tax)

Michigan alcohol taxes

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Product	Tax
Beer	$0.20 per gallon
Wine	$0.51 per gallon ($0.76 if above 16% alcohol by volume)
Liquor	state-controlled

Source: The Sales Tax Handbook

Michigan estate and inheritance taxes

Michigan has no estate or inheritance tax.

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.