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.
122 min read
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.
5 min read
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.
9 min read
In addition to the federal estate tax, which has a top marginal rate of 40 percent, 12 states and the District of Columbia impose estate taxes, while five states levy inheritance taxes.
8 min read
The past four years have brought significant focus on state income tax reform and relief, and with that, something of a flat tax revolution.
11 min read
Backfilling forgone local property tax revenue through new state taxes is difficult because it dramatically shifts overall tax burdens, undermines local accountability, and cannot easily adjust for changing population mixes.
20 min read
Wireless consumers continue to be burdened with high taxes, fees, and government surcharges in many states and localities throughout the country.
14 min read
High property taxes levied not only on land but also on buildings and structures can discourage investment in infrastructure, which businesses would have to pay additional tax on.
3 min read
Legal sports betting has grown rapidly since the Supreme Court granted states the ability to establish online sports betting markets in Murphy vs. NCAA in 2018.
6 min read
California levies the highest tax on gasoline at 70.9 cents per gallon (cpg), followed by Illinois at 66.4 cpg and Washington at 59.0 cpg.
8 min read
In a surprising tax code alteration that has frustrated Americans who enjoy gambling, a provision in the One Big Beautiful Bill Act limits gambling losses that can be used to offset gambling winnings to 90 percent of their value. This provision introduces a steep tax penalty for professional gamblers and certain casual bettors.
5 min read
As the market share of electric vehicles (EVs) on the road grows, the gas tax’s ability to fund road projects and decrease traffic congestion erodes. Both federal and state real tax revenue per vehicle mile traveled has been on a steady decline for decades, creating a fiscal gap for road expenditures even as the demand for road infrastructure improvements has grown.
5 min read
Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.
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