What Is Michigan's Income Tax Rate?

The State of Michigan imposes an income tax.

The state of Michigan places a number of taxes on its citizens. These include property tax, sales and use taxes and an income tax. Although the rate is different from that imposed by the federal government, it is typically imposed on the same amount of income that is subject to federal income tax.

Michigan Adjusted Gross Income

Michigan, in most cases, follows Federal law in calculating a tax payer's adjusted gross income. In fact, taxpayers simply enter the AGI from their Federal 1040 right onto their Michigan 1040. MIchigan does have some adjustments, though, which taxpayers calculate on Schedule 1 form. These adjustments include excluding losses or gains from out of state, excluding certain types of military income, and excluding income from federal government bonds, among other things. To calculate your income, simply add, or subtract, the bottom line on your Schedule 1 from your income to find your Michigan taxable income.

Michigan Exemptions

Exemptions are calculated differently in Michigan than on Federal taxes. Although the process starts by multiplying your total federal exemptions by $3,600, in the 2009 tax year, the process continues. Michigan offers additional exemptions for disabled people, disabled veterans and children under 18.

Michigan Income Tax Rate

Once you have calculated your income, simply multiply it by Michigan's flat tax rate of 4.35 percent to find your tax due, based on the rates in place for the 2009 tax year. You can then reduce your tax further through the use of any of the nonrefundable credits which are available through the Michigan Schedule 2. In addition, Michigan offers additional refundable credits for expenditures such as property taxes, adoption costs and other items.

Use Tax

In addition to Michigan's 4.25 percent income tax, they also impose a use tax on items that are purchased outside of the state of Michigan, but brought into the state, such as mail order items. Michigan requires that you pay six percent of the total cost of these out of state purchases with your income taxes. If you do not have accurate receipts, you can pay an estimated use tax, but the estimate is subject to audit.

References

• Michigan Department of Treasury: Michigan 1040 2009 Individual Income Tax Forms and Instructions
• Michigan Department of Treasury: 2009 Michigan Individual Income Tax Return MI-1040
• Michigan Department of Treasury: 2009 Michigan Schedule 1 Additions and Subtractions