Michigan — Personal Income Tax

Michigan imposes a personal income tax on residents, part-year residents, and nonresidents with Michigan-source income. The tax is administered under the Income Tax Act of 1967, Act 281, compiled in Michigan Compiled Laws (MCL) Chapter 206.

## Residents

A Michigan resident is an individual whose permanent home is in Michigan. You must file a Michigan return if Michigan income tax was withheld from your earnings and your taxable income is less than your personal exemption allowance, or if your adjusted gross income exceeds your exemption allowance.

Source: Michigan Department of Treasury — Individual Income Tax Filing Requirements FAQ

A temporary absence from Michigan, such as spending the winter in another state, does not make a person a part-year resident for tax purposes.

Source: 2025 Michigan Individual Income Tax MI-1040 Instructions, p. 10–11

For tax year 2025, the personal and stillbirth exemption allowances are $5,800 each, and the Michigan income tax rate is 4.25%.

Source: 2025 Michigan Individual Income Tax MI-1040 Instructions, p. 3

## Part-Year Residents

A part-year resident is a person who moved into or out of Michigan during the tax year. Part-year residents must file a Michigan income tax return and pay Michigan income tax on income earned, received, or accrued while living in Michigan.

Source: 2025 Michigan Individual Income Tax MI-1040 Instructions, p. 10

## Nonresidents

A nonresident is a person whose permanent home for the entire year was in another state. Nonresidents must file a Michigan return if they have Michigan-source income.

For a nonresident individual, estate, or trust, all taxable income is allocated to Michigan to the extent it is earned, received, or acquired from personal services performed in Michigan; as a distributive share of business net profits from work done, services rendered, or other business activities conducted in Michigan; as Michigan lottery winnings; or as casino or pari-mutuel wagering winnings paid by a Michigan casino or licensed race meeting.

Source: MCL § 206.110(2)

## Filing Even When No Tax Is Owed

A return may still be required to be filed even if no tax is ultimately owed, in order to report Michigan-source income or to claim a refund of taxes withheld.

Source: Michigan Department of Treasury — Individual Income Tax Filing Requirements FAQ

## Married Filing Status

Taxpayers who are husband and wife and who file a joint federal income tax return pursuant to the Internal Revenue Code must file a joint Michigan return. If Head of Household or Qualifying Surviving Spouse was used on the federal return, the Michigan return must be filed as Single.

Source: MCL § 206.311(3)

The standard deadline for filing a Michigan individual income tax return is April 15 following the close of the tax year. Fiscal year filers use the same due dates as their federal return.

Source: 2025 Michigan Individual Income Tax MI-1040 Instructions, p. 3

Michigan imposes a 4.25% tax on the taxable income of individuals and other persons subject to the personal income tax. This rate has applied since October 1, 2012, and remains in effect for the 2026 tax year. The statute includes a potential formulaic rate reduction mechanism for tax years beginning on or after January 1, 2023, if general fund revenue growth exceeds inflation, but the conditions for reduction were not met for the 2026 tax year.

Source: MCL § 206.51; Michigan Department of Treasury — 2026 Tax Year Rate Notice

Michigan taxable income for individuals starts with federal adjusted gross income (AGI) as defined in the Internal Revenue Code, then applies Michigan-specific additions and subtractions. Required additions include interest and dividends from other states' obligations and certain net operating loss add-backs. Permitted subtractions include interest from U.S. government obligations, Social Security benefits, military pay, certain retirement benefits, and refunds of Michigan or city income taxes previously included in federal AGI.

Source: MCL § 206.30(1)

Michigan taxpayers may claim a personal exemption for the taxpayer, the taxpayer's spouse (if filing separately and the spouse has no income and is not a dependent of another), and each dependent. For tax year 2026, the personal exemption amount is $5,900 per qualifying individual. The exemption is subtracted in calculating Michigan taxable income and is indexed annually for inflation under a statutory formula based on the Consumer Price Index.

Source: MCL § 206.30(2); Michigan Department of Treasury — 2026 Withholding Guide, p. 1

Michigan allows a subtraction from adjusted gross income for qualified retirement and pension benefits, subject to dollar limitations that vary by birth year and filing status. Public Act 4 of 2023 (PA 4) amended MCL § 206.30 to phase out the three-tier birth-year system over four years (2023–2026), with the phase-in completed for the 2026 tax year. The subtraction is authorized under MCL § 206.30(1)(f) and governed by subsections (9), (10), and (11).

## Unified Cap for 2026 and Later

For tax years beginning on or after January 1, 2026, MCL § 206.30(10) permits taxpayers to elect to deduct combined public and private retirement benefits up to the inflation-adjusted private retirement maximum established under MCL § 206.30(1)(f)(iv). For the 2026 tax year, Revenue Administrative Bulletin 2026-1 sets this maximum at $67,610 for single filers and $135,220 for married filing jointly. These amounts are indexed annually for inflation based on the Consumer Price Index as required by MCL § 206.30(1)(f)(iv).

The unified cap applies to all retirement income included in federal adjusted gross income, including distributions from defined benefit pensions (public and private), defined contribution plans (401(k), 403(b)), individual retirement accounts (IRAs), self-employed retirement plans, and other qualified distributions reported on IRS Form 1099-R. Taxpayers must combine all deductible public retirement income—whether federal, Michigan, or from another state government with a similar or reciprocal deduction—and any private retirement income, then apply the limitation to the combined total. MCL § 206.30(10)(d).

## Exception for Taxpayers Born Before 1946

Taxpayers born before January 1, 1946 may elect to continue taking an unlimited deduction for all retirement or pension benefits received from public sources under MCL § 206.30(9)(a), which predates PA 4. Public retirement for this purpose includes retirement or pension benefits from federal employment, Michigan state and local government employment (including political subdivisions), military service, railroad retirement (Tier 2), and the Michigan National Guard. However, these taxpayers must still reduce the maximum allowable subtraction for any private retirement income by the amount of any public retirement benefits subtracted. MCL § 206.30(1)(f)(iv).

Alternatively, taxpayers born before 1946 may elect to apply the unified cap under subsection (10) if that produces a more favorable result; the election is made annually.

## Special Election for Public Safety Retirees

MCL § 206.30(11) provides that for tax years beginning on or after January 1, 2023, a taxpayer with retirement or pension benefits received for services as:

• a public police or fire department employee subject to 1969 PA 312, MCL 423.231 to 423.247,
• a state police trooper or state police sergeant subject to 1980 PA 17, MCL 423.271 to 423.287, or
• a corrections officer employed by a county sheriff in a county jail, work camp, or other facility maintained by a county that houses adult prisoners

may elect to deduct retirement or pension benefits as provided under subsection (1)(f) without any additional limitations or restrictions, or may elect to apply the limitations and restrictions in subsection (9) or (10). Most public safety retirees will benefit from the unlimited option.

## Items Fully Exempt (Not Subject to the Cap)

The following retirement-related items are fully exempt from Michigan income tax and do not count against the retirement subtraction cap:

• Social Security benefits: To the extent included in federal adjusted gross income, Social Security benefits are subtracted in full. MCL § 206.30(1)(f)(i).
• Military retirement pay: Retirement or pension benefits from service in the U.S. armed forces and Michigan National Guard are fully deductible without dollar limitation. MCL § 206.30(1)(e).
• Railroad Retirement Act benefits: Benefits paid under the Railroad Retirement Act of 1974 are treated the same as Social Security benefits to the extent they are the substantial equivalent of Social Security benefits (Tier 1). MCL § 206.30(1)(f)(i). Tier 2 railroad retirement benefits are treated as public retirement income.

## Qualified Distribution Requirement

To qualify for the retirement subtraction, the distribution must be made upon retirement under the specific rules of the retirement plan. Revenue Administrative Bulletin 2026-1 explains that for Michigan purposes, qualifying retirement benefits include most payments reported on IRS Form 1099-R, including defined benefit pensions, IRA distributions, and most payments from defined contribution plans. The Michigan Department of Treasury provides a 1099-R distribution chart to determine whether a distribution qualifies as a retirement or pension benefit subtraction.

## Phase-In Schedule and Effective Date

PA 4 of 2023 was signed March 7, 2023, and took effect February 13, 2024. MCL § 206.30(10) established a four-year phase-in schedule for the unified cap, with taxpayers born after 1945 eligible to deduct the following percentages of the inflation-adjusted maximum:

• 2023 tax year: 25% (for taxpayers born 1946 or later who have reached age 67)
• 2024 tax year: 50% (for taxpayers born 1946 or later who have reached age 62)
• 2025 tax year: 75% (for taxpayers born 1946 or later who have reached age 59)
• 2026 tax year and later: 100% (for all taxpayers born after 1945, regardless of age)

Taxpayers may elect each year to use either the phase-in method under subsection (10), the birth-year tier method under subsection (9), or (if eligible) the public safety election under subsection (11), whichever produces the most favorable result.

Source: MCL § 206.30; Revenue Administrative Bulletin 2026-1

Michigan determines residency based on domicile, with a statutory presumption for individuals present in the state for 183 days or more during the tax year. The distinction between domicile and physical presence is critical for snowbirds, remote workers, and individuals claiming to have changed residency.

## Statutory Definition of Resident

Under MCL § 206.18(1)(a), "resident" means an individual domiciled in Michigan. "Domicile" is defined as "a place where a person has his true, fixed and permanent home and principal establishment to which, whenever absent therefrom he intends to return, and domicile continues until another permanent establishment is established." A person may have multiple residences but can have only one domicile at any given time.

## 183-Day Statutory Presumption

MCL § 206.18(1)(a) establishes a bright-line rule: "If an individual lives in this state at least 183 days during the tax year or more than 1/2 the days during a taxable year of less than 12 months he shall be deemed a resident individual domiciled in this state." This statutory presumption treats the individual as domiciled in Michigan regardless of where the individual claims domicile is located. The 183-day test is measured by physical presence during the calendar tax year (or the applicable short tax year).

## Changing Domicile: Three-Part Test

Once an individual establishes domicile in Michigan, changing domicile requires satisfying three separate elements, all of which must occur concurrently. Revenue Administrative Bulletin 1990-6 explains that domicile is not lost unless there is "a concurrence of all the following: The specific intent to abandon the old domicile."

The Michigan Department of Treasury applies a three-part test through Form 3799 (Statement to Determine State of Domicile):

1. Specific intent to abandon the Michigan domicile. The individual must have subjective intent to give up Michigan as the permanent home. Form 3799, Part B, examines factors such as maintaining a Michigan driver's license, Michigan voter registration, Michigan vehicle registration, owning or renting a Michigan home, and the disposition of Michigan property.

1. Specific intent to acquire a new domicile outside Michigan. The individual must intend to establish a new permanent home in another state. Form 3799, Part C, examines whether the individual filed a formal declaration of domicile in the new state, obtained a driver's license in the new state, filed income tax returns in the new state as a resident, and registered to vote in the new state.

1. Physical presence in the new domicile. The individual must actually move to and be physically located in the new state. Form 3799, Part D, considers whether the individual, spouse, and dependents moved to the new state; whether bank accounts were established in the new state; and whether the individual joined organizations (churches, clubs, etc.) in the new state.

All three elements must be satisfied at the same time for domicile to change. The date on which all three requirements are first met is the date of the domicile change, and the individual files as a part-year resident for that year.

## Evidentiary Factors

The Michigan Department of Treasury considers multiple factors to determine domicile, none of which is individually controlling. These factors, drawn from Form 3799 and Revenue Administrative Bulletin 1990-6, include:

• Location of the individual's most important possessions
• Where the individual's family (spouse and dependents) resides
• State of voter registration
• Club and lodge memberships
• State issuing automobile licenses and vehicle registration
• Mailing address used for official documents
• State of driver's license or identification card
• Location of bank accounts
• Where the individual operates a business
• Address used on federal income tax returns
• State in which the individual would file for divorce

Revenue Administrative Bulletin 1990-6 notes that "the failure of a person to pay income taxes in the state to which he claims to have domicile is very significant."

## Presumption and Burden of Proof

Form 3799 is voluntary but states: "Without the necessary information, the Michigan Department of Treasury will assume the individual was a Michigan resident." The burden of proving a change of domicile rests on the taxpayer. Simply spending winter months in another state (the classic "snowbird" scenario) does not change domicile. The Michigan income tax instructions explain that "a temporary absence from Michigan, such as spending the winter in another state, does not make a person a part-year resident for tax purposes."

## Part-Year Resident Treatment

MCL § 206.18(1)(a) provides: "If an individual during the taxable year being a resident becomes a nonresident or vice versa, taxable income shall be determined separately for income in each status." A taxpayer who changes domicile mid-year files as a part-year resident for that tax year, reporting all income (from any source) earned while a Michigan resident, and only Michigan-source income earned while a nonresident.

Source: MCL § 206.18; Michigan Department of Treasury Form 3799 (Rev. 04-18); Revenue Administrative Bulletin 1990-6