Michigan

The Facts on Michigan's Tax Climate

Here are some basic facts on Michigan's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 7 in Michigan
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Michigan taxpayers work until April 7 to pay their total tax bill, ranking it 26th in the nation. That's five days before national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: Indiana, April 5 (ranked 32nd nationally); Ohio, April 6 (ranked 28th nationally); and Wisconsin, April 16 (ranked 7th nationally).
Full study of Tax Freedom Day, nationwide and in each state

Michigan's State and Local Tax Burden Slightly Below National Average
Michigan's 2009 state and local tax burden of 9.7% of income is slightly below the national average of 9.8%. Michigan's tax burden has decreased overall from 10.4% (15th nationally) in 1977 to 9.7% (21st nationally) in 2009. Michigan taxpayers pay $3,565 per capita in state and local taxes.
Michigan's State and Local Tax Burdens, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

Michigan's 2012 Business Tax Climate Ranks 18th
Michigan ranks 18th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states rank as follows: Indiana (11th), Ohio (39th), and Wisconsin (43rd).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)

Michigan's Individual Income Tax System
Michigan's personal income tax system consists of a simple 4.35% tax on an individual's federal adjusted gross income (with some modifications). Among states levying individual income taxes, Michigan's flat tax rate is 40th highest. Michigan's 2008 state-level individual income tax collections were $716 per person, which ranked 36th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Michigan's Corporate Income Tax System
Michigan levies a Single Business Tax (SBT), which is a modified value-added tax (VAT). The rate is 4.95% and there is an additional modified gross receipts tax at a rate of .8%. In 2008, state-level corporate tax collections (excluding local taxes) were $177 per capita, ranking it 14th highest nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita

Michigan Sales and Excise Taxes
Michigan levies a 6% general sales or use tax on consumers, slightly above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,180 per person, which ranks 38th highest nationally. Michigan's gasoline tax stands at 35 cents per gallon, ranking 13th highest nationally. Additionally, Michigan's 6% general sales tax is levied on the sale of gasoline purchases. Michigan's cigarette tax stands at $2.00 per pack of twenty, which ranks 10th highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1925 and the cigarette tax in 1947.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

Michigan Property Taxes
Michigan is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Michigan's localities collected $1,116.73 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Michigan collected $221.70 per capita during FY 2006. That brings its combined state/local property tax collections to $1,338.44 per capita, ranking 15th highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Michigan is a Donor State
Michigan taxpayers receive less federal funding per dollar of federal taxes paid than the average state. Per dollar of federal tax collected in 2005, Michigan citizens received approximately $0.92 in the way of federal spending. This ranks the state 37th nationally and represents a rise from 1995, when Michigan received $0.77 per dollar of federal taxes paid (ranked 45nd nationally). Neighboring states and the amount of federal spending they received per dollar of federal taxation paid were as follows: Indiana ($1.05), Ohio ($1.05), and Wisconsin ($0.86).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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