Michigan State Taxes: What You’ll Pay in 2025

No, but you may pay federal taxes on a portion of your Social Security benefits, depending on your "provisional income." In most cases, provisional income is equal to the combined total of half your Social Security benefits, your adjusted gross income (not including any Social Security benefits) and any tax-exempt interest for the year.

Up to 50 percent of your benefits will be taxed if your provisional income is $25,001 to $34,000--or if you file jointly and your provisional income is $32,001 to $44,000.

Up to 85 percent of your benefits will be taxed if your provisional income is more than $34,000 individually or more than $44,000 as a couple.

AARP's Social Security calculator can assist you in determining when to claim and how to maximize your Social Security benefits.

How is property taxed in Michigan?

Property tax in Michigan is a local tax based on your home’s taxable value and the local tax rate, known as the millage rate. State law caps yearly increases in taxable value at either 5 percent or the rate of inflation, whichever is less.

When a home sells or ownership is transferred, the taxable value is “uncapped” — and the following year’s taxes are based on the home’s assessed value, which is half its market value. The cap then applies to future increases in taxable value until the next time the home is sold.

Median property taxes in 2022 ranged from a high of $5,255 in Washtenaw County to a low of $1,048 in Luce County, according to the Tax Foundation.

To estimate how much you’ll pay in property taxes, use the Michigan Department of Treasury’s property tax estimator.

What about sales tax and other taxes?

• Sales and use tax: Michigan levies a 6 percent tax on most consumer goods and services. Michigan does not allow city or local units to impose sales tax.

• Certain items are exempt from the tax, including prescription drugs, prosthetic devices and durable medical equipment, and food so long as it’s not prepared for immediate consumption. Feminine hygiene products are exempt. Electricity, natural or artificial gas, and home heating fuels for residential use are taxed at a 4 percent rate.

• Gas and diesel: Michigan drivers pay an excise tax of 31 cents per gallon at the pump, in addition to a prepaid sales tax.

• Alcohol: Liquor is taxed at 10.8 percent of the retail price. Wine is taxed at 13.5 cents per liter if 16 percent alcohol or less, and 20 cents per liter if over 16 percent alcohol. The mixed-spirits drink tax is 30 cents per liter. Beer is taxed at $6.30 per barrel. These taxes are paid by the wholesaler or manufacturer but may be included in the retail price. Alcohol is also subject to sales tax.

• Lottery: Michigan taxes lottery winnings of more than $5,000. Michigan Lottery will withhold state taxes at the income tax rate in effect during the year in which you were paid the winnings (4.05 percent for tax year 2023) and 24 percent for federal income tax.

Will I or my heirs have to pay inheritance and estate tax in Michigan?

No. Michigan does not have an estate tax, and most people won’t pay an inheritance tax. Technically, the state’s inheritance tax is still in effect, but only for individuals who inherited from someone who died on or before Sept. 30, 1993. That’s a long time ago, so the inheritance tax would only kick in if an asset was discovered now and had not been included in the original estate.

Are there any tax breaks for older Michigan residents?

Older Michiganders may be eligible for several tax relief programs:

• Homestead property tax credit: Michigan has a homestead property tax credit for qualified homeowners and renters, regardless of age. You may qualify if you have owned or rented a Michigan property for at least six months and have a total household income of $69,700 or less. If you owned your home, the taxable value must not exceed $160,700. If you rent, you must be 65 or older and pay more than 40 percent of your total household income in rent to qualify. Find more information on the Department of Treasury website.

• Elderly or disabled credit: Michigan offers a break for taxpayers who are eligible for the federal Credit for the Elderly or the Disabled, claimed on Schedule R of the federal 1040. Michiganders can claim the same amount on Schedule 1 of their state income tax return. A copy of the federal Schedule R must be included with your Michigan filing.

• Tax deferment: If you’re over 62 and your household income for the previous year was $40,000 or less, you may qualify for a summer tax deferment, allowing you to delay paying your summer property taxes until February 15 of the following year. Contact your local treasurer for details.   Some counties may also allow people 65 and older to delay paying their winter property taxes without fees or interest. Check with your local treasurer to see if this is available where you live and whether you qualify.

• Veterans: If you are a veteran or actively serving in the military, you may be eligible for additional property tax credits and exemptions. Learn more here.

Are military benefits taxed in Michigan?

Military pensions are not taxed in Michigan. Michigan National Guard pensions and railroad benefits are also exempt, as is military active duty pay.

What is the deadline for filing Michigan state taxes in 2025?

A Michigan state tax return is due April 15, 2025, unless you file for an extension.

Find information about applying for an extension on the Michigan Department of Treasury website. You must pay any taxes owed by the original deadline to avoid penalties.

For help estimating your annual income taxes, use AARP's Tax Calculator.

Editor's note: This article was originally published on March 11, 2024. It has been updated to reflect new information. 

Sharon Waters, a former CPA, has written for Wired.com and other publications.

Also of Interest:

• States With Highest and Lowest Sales Tax Rates
• How to Get Free Tax Help
• Federal Income Tax Brackets for 2025