Michigan · the numbers
Michigan figures at a glance, 2026
The Michigan numbers for the 2026 return in one place: the 4.25% rate, the $5,900 exemption, the retirement subtraction cap, the age-67 standard deduction, the credits, the homestead credit limits, the city rates, the estimated-payment threshold and the dates, each with the 2025 figure beside it. For anyone who files here, and for anyone checking a preparer’s work.
By Charles Trautman, EA, editor
Need to Know Tax · written from Michigan Department of Treasury sources, November 3, 2026; updated November 12, 2026 after the election · not yet reviewed by a Michigan practitioner
Michigan has one rate, one exemption figure, and a longer list of indexed amounts than its flat rate suggests, because the retirement subtraction cap, the homestead credit limits and the special exemptions all move each year. For 2026 the rate is 4.25%, confirmed by the Department of Treasury in April, and the exemption is $5,900. The retirement subtraction reaches 100% of the cap for every filer born after 1945. Tips and overtime that qualify federally come off the Michigan return for the first time. Several 2026 figures are still to come from Treasury and are shown here as the 2025 amounts, labeled as such.
The core figures
| Item | 2025 | 2026 |
|---|---|---|
| Tax rate, all income | 4.25% | 4.25% |
| Starting point | Federal AGI | Federal AGI |
| Standard deduction (under 67) and itemized deductions | None | None |
| Personal exemption, per person (filer, spouse, each dependent); stillbirth exemption | $5,800 | $5,900 |
| Special exemption: deaf, blind, hemiplegic, paraplegic, quadriplegic, totally and permanently disabled | $3,400 | $3,400 (2025 figure; 2026 to come) |
| Qualified disabled veteran exemption | $500 | $500 (2025 figure; 2026 to come) |
| Retirement subtraction maximum (Form 4884), single / joint | $65,897 / $131,794 | 2025 figure; 2026 to come |
| Share of the maximum available to filers born after 1945 | 75% ($49,423 / $98,846), or old-law amount if larger | 100% |
| Public pension subtraction, born before 1946 | Unlimited | Unlimited |
| Michigan Standard Deduction at 67 (instead of the retirement subtraction), single / joint | $20,000 / $40,000 | $20,000 / $40,000 |
| Standard deduction reduced by the Social Security subtraction, born after 1952 | Yes | No (2026–2028) |
| Social Security subtraction | 100% of the taxable amount | 100% of the taxable amount |
| Military retirement, National Guard and railroad retirement subtraction | 100% | 100% |
| Dividends, interest and capital gains subtraction, born before 1946, single / joint | $14,688 / $29,376 | 2025 figure; 2026 to come |
| Subtraction for federal qualified tips and qualified overtime deductions | None | Equal to the federal amount (2026–2028) |
| Federal 100% bonus depreciation, 168(n), 174A, higher 179 limit | Decoupled (P.A. 24 adjustments) | Decoupled |
| Internal Revenue Code conformity date | January 1, 2025 | January 1, 2025 |
| Local income taxes | 24 cities | 24 cities |
The exemption is indexed and has moved $100 to $200 a year: $5,600 for 2024, $5,800 for 2025, $5,900 for 2026. At 4.25%, each $5,900 exemption is worth $251 of tax. The rate is set each April under MCL 206.51(1)(c) by comparing general fund revenue growth with inflation; for 2026 revenue fell 1.56% and inflation rose 2.70%, so no cut applied.
The exemption by household
| Household | Exemptions | Tax saved at 4.25% |
|---|---|---|
| Single | $5,900 | $251 |
| Married, no dependents | $11,800 | $502 |
| Married, two dependent children | $23,600 | $1,003 |
| Head of household, one child | $11,800 | $502 |
| Single, blind | $9,300 (2025 special exemption; 2026 to come) | $395 |
| Dependent claimed on a parent’s return, with AGI of $1,500 or less | Generally need not file |
There is no age add-on to the exemption. A filer who has reached 67 instead chooses between the retirement subtraction and the $20,000 / $40,000 Michigan Standard Deduction, which is reduced by the exemptions claimed. Unlike the federal exemption of years past, Michigan’s does not phase out at any income.
The credits
| Credit | Figure | Refundable? | Limits |
|---|---|---|---|
| Michigan EITC (MI-1040 line 28) | 30% of the federal earned income credit | Yes | Federal EITC limits; residents and part-year residents need no Michigan taxable income |
| Homestead Property Tax Credit (MI-1040CR) | Property tax (23% of rent for renters) over 3.2% of household resources; 60% of the excess for most claimants, 100% falling to 60% for seniors as resources rise from $21,000 to $30,000; maximum $1,900 | Yes | Total household resources $71,500; taxable value $165,400; phase-out 10% per $1,000 above $62,500 (all 2025 figures; 2026 to come) |
| Homestead credit for veterans and the blind (MI-1040CR-2) | Same limits, different formula | Yes | As above |
| Home Heating Credit (MI-1040CR-7) | Standard allowance by household size, or actual heating cost; paid mostly by energy draft | Yes | Income limits in the form’s Tables A and B; due September 30, 2027 |
| Income tax paid to another state, city or Canadian province (line 18) | Lesser of the tax paid or the Michigan tax on the same income | No | Not for reciprocal-state wages |
| Flow-through entity tax credit | Owner’s share of the 4.25% tax the entity elected to pay | Yes | Needs the entity’s Schedule FTE figures |
| Organ donation expense credit | Unreimbursed live-donor expenses up to $10,000, once | No | New for 2025 |
| Child tax credit; child and dependent care credit; K-12 or tuition credit | None at the state level | Each dependent is one $5,900 exemption instead |
The Michigan EITC rides on the federal credit, so it moves with federal inflation indexing without any action in Lansing. For 2026 a family with three children at the federal maximum of about $8,200 receives roughly $2,460 from Michigan. The homestead credit is the one most often missed, because it sits on the income tax return but is really a property tax rebate: renters, seniors on Social Security who owe no income tax, and homeowners with modest incomes all claim it on the MI-1040CR, and a part-year resident here six months or more may claim a prorated share.
Subtractions with dollar limits
| Subtraction | Line | Limit, single / joint |
|---|---|---|
| Michigan Education Savings Program (MESP) and MI 529 Advisor Plan contributions | 17 | $5,000 / $10,000 |
| MiABLE contributions | 17 | $5,000 / $10,000 (line 17 total $10,000 / $20,000) |
| Michigan Education Trust prepaid tuition contract payments | 18 | No limit |
| Retirement and pension benefits (Form 4884) | 27 | $65,897 / $131,794 for 2025; 2026 to come |
| Dividends, interest and capital gains, born before 1946 | 28 | $14,688 / $29,376 for 2025; 2026 to come |
| Michigan Standard Deduction at 67 | 25–26 | $20,000 / $40,000, less exemptions |
| Tips and overtime (federal IRC 224 and 225 amounts) | Line to come | Federal amount; nonresidents, Michigan-source only |
Withholding, estimated payments and penalties
| Item | 2026 |
|---|---|
| Wage withholding (MI-W4) | 4.25% of wages after $5,900 per exemption claimed |
| Estimated payments required when tax after withholding and credits exceeds | $500 |
| Safe harbor | 90% of 2026 tax, or 100% of 2025 tax, or 110% of 2025 tax if 2025 AGI was over $150,000 ($75,000 married filing separately), in four equal, timely installments |
| Estimated payment dates | April 15, June 15, September 15, 2026; January 15, 2027 |
| Interest on late payment | 1% above the adjusted prime rate, reset January 1 and July 1, from April 15 |
| Failure-to-pay penalty | 5% of the tax, plus 5% a month after the second month, to 25% |
| Refund claim deadline | Four years from the due date (April 15, 2031 for the 2026 return) |
Worked example: what the 2026 figures do for a retired couple
Married, both born in 1957, both 69 in 2026. A public school pension of $44,000, a private 401(k) with employer match paying $30,000, taxable Social Security of $28,000, and $6,000 of interest. AGI $108,000. Two ways to figure the 2026 return.
| Retirement subtraction (Form 4884) | Michigan Standard Deduction (Schedule 1 line 26) | |
|---|---|---|
| Federal AGI | $108,000 | $108,000 |
| Social Security subtraction | −$28,000 | −$28,000 |
| Retirement benefits, $74,000, under the joint cap | −$74,000 | $0 |
| Standard deduction: $40,000 less $11,800 exemptions (no Social Security offset in 2026) | $0 | −$28,200 |
| Exemptions, 2 × $5,900 | −$11,800 | −$11,800 |
| Michigan taxable income | $0 (the $6,000 of interest is covered) | $40,000 |
| Tax at 4.25% | $0 | $1,700 |
The retirement subtraction wins by $1,700, and would have won in 2025 too at 75% of the cap ($98,846 against $74,000 of benefits). The standard deduction is the better choice for a 67-year-old whose income is wages, interest and rents rather than pensions. Each year the choice is made fresh.
Beyond the income tax
| Item | 2026 |
|---|---|
| Detroit city income tax, resident / nonresident; exemption | 2.4% / 1.2%; $600 per person; Forms 5118, 5119, 5120 filed through Treasury |
| Other 23 taxing cities | Most 1% residents / 0.5% nonresidents; Grand Rapids 1.5% / 0.75%; Saginaw and Highland Park 2% / 1%; each city administers its own return |
| County or school district income tax | None |
| State sales and use tax | 6%, no local add-ons; groceries and prescriptions exempt; motor fuel removed from the sales tax January 1, 2026, with the per-gallon excise raised from 31 to 51 cents (verify) |
| Estate or inheritance tax | None; the inheritance tax applies only to deaths on or before September 30, 1993 |
| Principal Residence Exemption (property tax) | Up to 18 school operating mills removed from an owner-occupied home; Form 2368 with the local assessor |
| Taxable value cap (Proposal A) | Growth limited to the lesser of inflation or 5% a year until the home is sold |
| Reciprocal states for wages | Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin |
| Residency | Domicile; a person living in Michigan 183 days or more is deemed a resident |
What changed from 2025
Exemption, $5,900. Up from $5,800. Withholding tables changed January 1, 2026.
Retirement subtraction at 100%. The last step of the 2023 phase-in. Every filer born after 1945 may subtract public and private retirement benefits up to the indexed cap; 2025 allowed 75%.
Tips and overtime subtraction. New, equal to the federal deductions, for 2026 through 2028 only.
Standard deduction at 67 without the Social Security offset. For filers born after 1952, 2026 through 2028. Still reduced by exemptions.
Rate unchanged at 4.25%. The revenue trigger did not fire. The 2027 rate is set in April 2027.
Bonus depreciation decoupled. P.A. 24 adjustments on Schedule 1 lines 8 and 23 for business, farm and rental owners; the lines first appeared on the 2025 form.
Still to come from Treasury. The 2026 retirement subtraction cap, the 2026 special exemption amounts, the 2026 homestead credit limits, the 2026 born-before-1946 investment income cap, and the Schedule 1 line for tips and overtime.
No ballot measure. The graduated-tax initiative did not qualify for the November 3, 2026 ballot.
Behind the scenes: why so many Michigan figures move
The exemption, the retirement cap, the homestead credit limits, the special exemptions and the born-before-1946 investment income cap are all indexed to inflation by statute, which is why Michigan publishes a new set of figures each year even though the rate almost never changes, and why several of them arrive late: Treasury waits for the index. The $20,000 / $40,000 Michigan Standard Deduction is the exception. It was fixed in the 2011 law that created the birth-year tiers and has not moved since, so each year the growing retirement cap beats it for a few more retirees. The rate moves only by the April revenue test or by an act of the legislature, and the legislature has not changed it since 2012 (verify).
What to bring
- Last year’s MI-1040 and Schedule 1, to compare the figures line by line
- Dates of birth for both spouses; 1946, 1952 and age 67 are the dividing lines
- Every 1099-R with the plan type, and the SSA-1099
- The 2026 property tax statements and the taxable value from the assessment notice, or rent paid and the landlord’s name and address, for the homestead credit
- Heating bills from November 2025 through October 2026 if the alternate home heating credit might apply
- MESP, MI 529 Advisor, MiABLE and MET contribution statements
- City income tax withheld (W-2 boxes 18–20) and any city return filed
- Estimated payment confirmations with dates
Questions people ask
What is the Michigan exemption for 2026?
$5,900 for the filer, the spouse and each dependent, plus a special exemption of $3,400 for a filer who is deaf, blind or disabled and $500 for a qualified disabled veteran (2025 figures until Treasury publishes 2026). There is no age add-on and no income phase-out.
What is the 2026 retirement subtraction cap?
Treasury had not published it when this was written. The 2025 cap was $65,897 single and $131,794 joint, and the 2026 figure will be higher by the inflation adjustment. For 2026 the full cap is available to everyone born after 1945.
Is the Michigan EITC still 30%?
Yes. It is 30% of the federal earned income credit, refundable, and a resident or part-year resident claims it even with no Michigan tax to offset.
When are the 2026 homestead credit limits coming?
With the 2026 MI-1040CR instructions, normally late in the year. The 2025 limits were $71,500 of total household resources, $165,400 of taxable value and a $1,900 maximum, with the phase-out starting at $62,500.
Did Michigan match the federal tips and overtime deductions?
Yes, for 2026, 2027 and 2028. The Michigan subtraction equals the federal deduction claimed on the federal return. Nonresidents get it only for Michigan work.
Does Michigan have an estate tax?
No. Neither an estate tax nor an inheritance tax applies to deaths after September 30, 1993, and there is no gift tax.
One rate, one exemption, and a handful of indexed caps that move every year
Know the 2026 retirement cap when Treasury posts it, and know which side of 1946, 1952 and 67 each spouse falls on.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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Forms and official pages named in this article
- Form MI-1040, Individual Income Tax Return (2025)
- Schedule 1, Additions and Subtractions, instructions (2025)
- Form 4884, Retirement and Pension Schedule, instructions (2025)
- Form MI-1040CR, Homestead Property Tax Credit, instructions (2025)
- Form MI-2210, Underpayment of Estimated Income Tax (2025)
- Form MI-W4, Employee’s Michigan Withholding Exemption Certificate
- Michigan individual income tax forms (all forms for the year)
Sources and where to check
- Treasury notice, April 15, 2026: 4.25% rate for the 2026 tax year
- Treasury: rate and personal exemption by year
- MI-1040 instruction booklet, 2025 (exemptions, estimated payments, filing requirements)
- Revenue Administrative Bulletin 2026-1: retirement and pension benefits
- Treasury notice, November 17, 2025: Social Security and the standard deduction under PA 24
- Treasury notice, January 6, 2026: tips and overtime deductions
- Treasury: Michigan Earned Income Tax Credit for Working Families
- Treasury: Homestead Property Tax Credit, 2025 limits
- Form 4, Application for Extension (interest and penalty rates)
- Treasury: what cities impose an income tax
- City of Detroit: income tax rates and exemption