The complete guide
Michigan city income tax guide 2026: an overview
Michigan is one of only a handful of states where cities levy their own income taxes on top of the state’s. In 2026, 24 Michigan cities collect a wage tax — and the rate and which side of a city line you live on can change your take-home by hundreds of dollars a year.
Most people know Michigan taxes income at a flat 4.25%. Far fewer know that 24 cities inside the state add their own income tax on top — some at a rate as high as Detroit’s 2.4%. If you live or work in one of these cities, the city tax is withheld from every paycheck alongside federal, FICA and state. This guide explains the whole system: which cities tax, how residency determines your rate, what counts as taxable income, and what the tax actually costs you.
The short version
Michigan allows cities to levy a local income tax on wages, salaries and self-employment income earned within the city, and on the income of residents. The standard structure is a resident rate and a non-resident rate: residents pay the full rate on their income, and non-residents who commute into the city to work pay a half rate on the wages they earn there. A handful of cities vary from the standard pattern.
The rates are flat — there are no brackets. What you pay is simply rate times taxable wages. That makes the city tax the most predictable line on a Michigan pay stub, and it makes the math easy to run by hand or with a calculator.
The current rates range from 0.5% for non-residents in the standard 1% cities all the way up to Detroit’s 2.4% resident rate — the highest city income tax in Michigan, followed by Highland Park’s 2.0% and Grand Rapids’ 1.5%.
Which cities tax income in 2026
Twenty-four Michigan cities collect an income tax. They are Detroit, Grand Rapids, Highland Park, Saginaw, Lansing, Flint, Pontiac, Battle Creek, Jackson, Muskegon, Hamtramck, Walker, East Lansing, Muskegon Heights, Port Huron, Albion, Benton Harbor, Big Rapids, Grayling, Hudson, Ionia, Lapeer, Portland and Springfield.
The rates split into three tiers. Detroit is alone at 2.4% resident / 1.2% non-resident. Highland Park sits at 2.0% / 1.0%. Grand Rapids is at 1.5% / 0.75%, and Saginaw at 1.5% / 0.75% too. Everything else follows the standard Michigan pattern of 1.0% resident / 0.5% non-resident — that covers Lansing, Flint, Pontiac, Battle Creek, Jackson, Muskegon, Hamtramck, Walker, East Lansing and the smaller cities.
The other side of the coin matters just as much: most Michigan cities, including Ann Arbor, Troy, Warren, Sterling Heights, Livonia, Dearborn, Kalamazoo and dozens more, have no city income tax at all. Your take-home in those cities is untouched by any local wage tax.
How the resident and non-resident split works
Residency is the single most important input for a Michigan city tax. The resident rate applies to anyone whose legal address is inside the taxing city, on all their income. The non-resident rate applies to anyone who lives elsewhere but earns wages within the city — the classic commuter.
The two rules can apply to the same person. If you live in a taxing city and work in a different taxing city, you pay the resident rate in your home city and the non-resident rate in your work city, with the workday allocation determining how much income each city taxes. This is common across the Lansing–East Lansing line, the Grand Rapids–Walker line, and the Muskegon–Muskegon Heights border.
A few examples make the pattern concrete. A resident of Detroit pays 2.4%. A person who lives in Warren and works in Detroit pays Detroit’s 1.2% non-resident rate on their Detroit wages. A person who lives in Lansing and works in East Lansing pays Lansing’s 1% resident rate plus East Lansing’s 0.5% non-resident rate on their East Lansing wages. And a person who lives and works in Ann Arbor pays no city tax at all, because Ann Arbor does not levy one.
What income the city tax applies to
The base of the city income tax is generally the same income Michigan taxes at the state level: wages, salaries, tips, and net earnings from self-employment. The city tax is computed on a base that starts with your Michigan taxable income, so the pre-tax deductions that reduce your state tax — like retirement contributions to a 401(k) or an employer plan — also reduce your city tax.
Social Security benefits are excluded from Michigan’s income tax, and they are excluded from every city income tax as well. That is a significant rule for retirees living in a taxing city like Detroit, Grand Rapids or Lansing: their Social Security is not subject to the city rate, and most of their pension income may be excluded by the retirement phase-in if they were born after 1945.
Other income types have specific city treatment that varies slightly by city — dividend and interest income, for example, may be included for residents in some cities. For wage earners — which is the vast majority of people reading this — the practical rule is simple: city tax = city rate × (gross wages − pre-tax retirement − other pre-tax deductions).
The two highest: Detroit and Highland Park
Detroit’s city income tax is 2.4% for residents and 1.2% for non-residents, the highest in Michigan. On a $70,000 salary, a Detroit resident pays about $1,680 a year to the city before the small per-filer exemption — on top of about $2,975 to the state. A suburban commuter into Detroit pays about $840 a year.
Highland Park, which touches Detroit on the north, charges 2.0% for residents and 1.0% for non-residents. It is a small city with a big rate — the second-highest in the state — and because it borders Detroit, a worker who lives in Highland Park and works in Detroit can pay both the 2.0% resident rate and Detroit’s 1.2% non-resident rate in the same year.
Both cities allow a small personal exemption that shields the first dollars of wages from the tax. The exemption is small relative to a full paycheck — it reduces the annual city tax by roughly $14 to $50 depending on the city and filing status — but it is the reason the exact tax is a touch less than a flat rate times gross.
The 1.5% tier: Grand Rapids and Saginaw
Grand Rapids charges 1.5% for residents and 0.75% for non-residents, the rate that applies to the state’s second-largest city and its large commuter workforce. On a $70,000 salary, a Grand Rapids resident pays about $1,050 a year; a commuter from Wyoming, Kentwood or Grandville pays about $525.
Saginaw matches that structure at 1.5% resident / 0.75% non-resident. It is the highest-rate city in the Tri-Cities region, where Bay City and Midland charge nothing. A Saginaw resident earning $60,000 pays about $900 a year in city tax; a commuter from Bay City into Saginaw pays about $450.
Both cities follow the standard withholding mechanics: employers remit the tax, it appears as its own line on the stub, and most wage earners never file a return.
The standard 1% tier — the largest group
The majority of Michigan’s taxing cities use the standard 1% resident / 0.5% non-resident structure: Lansing, Flint, Pontiac, Battle Creek, Jackson, Muskegon, Hamtramck, Walker, East Lansing, Muskegon Heights, Port Huron, Albion, Benton Harbor, Big Rapids, Grayling, Hudson, Ionia, Lapeer, Portland and Springfield.
At 1%, the tax is a modest but real cost. A $50,000 salary in a standard city costs $500 a year for a resident or $250 for a commuter. Spread across 26 biweekly checks, that is about $19 (resident) or $10 (commuter) per check. Small by the standards of federal and state withholding, but very real when you add it up over a career — and entirely avoidable depending on which side of the city line you live or work.
The uniformity of the 1% tier is useful for comparison shopping. If you know the resident rate is 1%, you can compute any city’s line in seconds: move the decimal two places on your taxable wages.
The cities that do NOT tax: why it matters
For every taxing city there are neighbors that charge nothing, and that is where the real comparison lives. Ann Arbor has no city income tax. Troy, Warren, Sterling Heights, Livonia, Dearborn, Farmington Hills, Rochester Hills, Kalamazoo, Wyoming, and the townships that ring most taxing cities all skip the tax entirely.
The practical effect: two otherwise identical jobs can differ by hundreds of dollars a year in take-home purely because of the address on the office or the apartment. A $75,000 salary in Detroit costs a resident about $1,800 a year in city tax; the same salary in neighboring Warren costs nothing. A $50,000 salary in Lansing costs a resident $500; across the line in Delhi Township it costs nothing.
This is the core reason a Michigan paycheck calculator that ignores city taxes is incomplete. The city line is real, it is withheld from your check, and it is entirely missing from most national calculators.
Two-city stacking: when you pay two city taxes
The one situation where city taxes multiply is when your home city and your work city are both taxing cities. Michigan cities that tax income follow the workday-by-workday rule: your work city taxes the wages you earn within its limits, and your home city taxes you as a resident on your income.
The most common stacks: living in Hamtramck (1%) and working in Detroit (1.2% non-resident); living in Lansing (1%) and working in East Lansing (0.5% non-resident); living in Walker (1%) and working in Grand Rapids (0.75% non-resident); living in Muskegon Heights (1%) and working in Muskegon (0.5% non-resident); and living in Portland (1%) and working in Ionia (0.5% non-resident).
In every case the total is still small relative to federal and state withholding — usually under 2% of gross even in the worst stacks — but it is real money that a generic calculator never shows.
Withholding and filing: what you actually do
For wage earners the city tax is handled entirely through withholding. Your employer is required to withhold the city tax (at the resident rate if you live in the city, the non-resident rate if you work there from outside) and remit it to the city. It appears on your pay stub as a separate line, typically labeled with the city name.
Most employees never file a city income tax return. You may need to file one if you have non-wage income the city taxes, if you worked part of the year in and part out of a city, if your employer failed to withhold, or if you have a W-2 from a city that withheld too much or too little.
Self-employed residents of a taxing city owe the city tax on their net profit and pay it through quarterly estimates, exactly like they do for the state and federal governments. The city’s treasury, finance or income-tax office administers the tax, separate from the state Treasury.
Retirees and Social Security
Social Security is not subject to any Michigan city income tax. For retirees in Detroit, Grand Rapids, Lansing or any other taxing city, their Social Security check is untouched by the local rate.
Pension and retirement-plan income follows the same phase-in Michigan applies at the state level. For workers born after 1945, retirement income is excluded from Michigan taxable income up to $67,610 for single filers and $135,220 for married couples filing jointly in 2026. Because the city base starts from Michigan taxable income, the same exclusions flow through to the city tax.
The practical result: many retirees living in taxing cities owe very little — sometimes nothing — in city income tax, despite the headline rate.
How to run your own numbers
You can compute your city tax yourself in one line: take your gross wages, subtract your pre-tax retirement contributions and other pre-tax deductions, and multiply by your city’s rate. That is exactly what this site’s calculator does, but with the federal, FICA and state layers on top so you get the full net.
Set the city selector to the city where you work and the residency toggle to your home situation. The calculator will apply the correct resident or non-resident rate, add Michigan’s 4.25% and the federal and FICA withholding, and return your exact per-period take-home.
The two most useful comparisons to run: your current address against the non-taxing neighbor across the city line, and your current job city against a job in a different city. Both take under a minute and both show the real value of the city line.