Michigan has a flat 4.25 percent individual income tax rate. There are also jurisdictions that collect local income taxes. Michigan has a flat 6.00 percent corporate income tax rate, a 6.00 percent state sales tax rate, and an average combined state and local sales tax rate of 6.00 percent. Michigan has a 1.19 percent effective property tax rate on owner-occupied housing value. Michigan does not have an estate tax or inheritance tax. Michigan’s gas tax is 53.4 cents per gallon, and its cigarette excise tax is $2.00 per pack of 20 cigarettes.
Michigan raises tax revenue primarily through property taxes (33.8 percent of total state and local tax revenue), general sales taxes (23.7 percent), and individual income taxes (22.7 percent). Michigan collects $5,413 in state and local tax collections per capita, carries $7,460 in state and local debt per capita, and has an 82 percent funded ratio of public pension plans. Michigan’s tax system ranks 16th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Michigan is no exception. Use the tabs below to compare Michigan taxes with other states and to see how Michigan raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
7 min read
Two pieces of tobacco legislation in Michigan have the potential to decrease state tax collections by $320 million per year, deter smokers from switching to less harmful products, and increase illicit trade and crime.
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Thirty-four states will ring in the new year with notable tax changes, including 15 states cutting individual or corporate income taxes (and some cutting both).
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Marijuana taxation is one of the hottest policy issues in the United States. Twenty-one states have implemented legislation to legalize and tax recreational marijuana sales.
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People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
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Contrary to initial expectations, the pandemic years were good for state and local tax collections, and while the surges of 2021 and 2022 have not continued into calendar year 2023, revenues remain robust in most states and well above pre-pandemic levels even after accounting for inflation.
5 min read
The latest IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state’s economic growth and governmental coffers.
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To alleviate the regressive impact on wireless consumers, states should examine their existing communications tax structures and consider policies that transition their tax systems away from narrowly based wireless taxes and toward broad-based tax sources.
18 min read
Short FormWhat do The Rolling Stones, NFL star Tyreek Hill, and Maryland millionaires have in common? They all moved because of taxes.
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