How does Michigan’s tax code compare? Michigan has a flat 4.25 percent individual income tax rate. There are also jurisdictions that collect local income taxes. Michigan has a 6.0 percent corporate income tax rate. Michigan also has a 6.00 percent state sales tax rate. Michigan has a 1.24 percent effective property tax rate on owner-occupied housing value.
Michigan does not have an estate tax or inheritance tax. Michigan has a 48 cents per gallon gas tax rate and a $2.00 cigarette excise tax rate. Michigan collects $4,981 in state and local tax collections per capita. Michigan has $8,018 in state and local debt per capita and has a 74 percent funded ratio of public pension plans. Michigan’s tax system ranks 14th overall on the 2025 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Michigan is no exception. The first step towards understanding Michigan’s tax code is knowing the basics. How does Michigan collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: 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.
115 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
Tax burdens rose across the country as pandemic-era economic changes caused taxable income, activities, and property values to rise faster than net national product. Tax burdens in 2020, 2021, and 2022 are all higher than in any other year since 1978.
24 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?
8 min read
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
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections).
9 min read
In recognition of the fact that there are better and worse ways to raise revenue, our Index focuses on how state tax revenue is raised, not how much. The rankings, therefore, reflect how well states structure their tax systems.
111 min read
The differences in purchasing power can be large and they have significant implications for the relative impact of economic and tax policies across the United States.
3 min read
The state EV taxation landscape reflects the evolving transportation sector and the pressing need to address both fiscal gaps in road funding and environmental concerns.
4 min read
Any move to repeal the cap or enhance the deduction would disproportionately benefit higher earners, making the tax code more regressive.
5 min read
Property taxes are the primary tool for financing local governments and generate a significant share of state and local revenues.
6 min read
If the policy goal of taxing cigarettes is to encourage cessation, vapor taxation must be considered a part of that policy design.
3 min read
As more and more states move away from throwback or throwout rules, those states that still impose these rules are becoming less attractive for businesses, which are incentivized to relocate their sales activities to non-throwback states.
6 min read
California pumps out the highest state gas tax rate of 77.9 cents per gallon (cpg), followed by Illinois (66.5 cpg) and Pennsylvania (62.2 cpg).
2 min read
However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
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