Determination engine

Which state do you actually withhold in?

Reciprocity, convenience-of-the-employer, nonresident thresholds and unemployment localization, applied together to one employee's facts. Every answer cites the state source it came from.

Withhold Minnesota income tax.

Michigan and Minnesota have a reciprocal agreement, so the work state stands down once the exemption certificate is on file.

Income tax withheld to

Minnesota

Graduated, top rate 9.85%

Employee certificate

MI-W4

Employee's Michigan Withholding Exemption Certificate (reciprocal-state exemption line)

Unemployment insurance

Michigan

Localized under factor 1: Localization.

Reciprocal agreement

Yes

Michigan exempts Minnesota residents.

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File MI-W4 with the employer

Reciprocity is not automatic. Until the employee files MI-W4 (Employee's Michigan Withholding Exemption Certificate (reciprocal-state exemption line)) you are legally required to withhold Michigan tax. Keep the signed form on file; it is not sent to the state.

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Withhold Minnesota income tax instead

Under the agreement the employee is taxed only by their state of residence. You will need a Minnesota withholding account.

Reciprocity does not cover Michigan local taxes

24 Michigan cities levy a municipal income tax (Detroit at 2.4% resident / 1.2% nonresident; most others 1% resident / 0.5% nonresident). Employers in those cities must withhold city tax separately. Michigan's state reciprocity agreements do NOT exempt an employee from Michigan CITY income tax on work physically performed in the city -- Detroit in particular taxes nonresidents on Detroit workdays.

Minnesota also runs a paid leave program

The employee resides in Minnesota, which has a mandatory paid leave program, but unemployment coverage is localized to Michigan. Check whether Minnesota requires coverage based on residence; several programs use a work-location test and a few do not.

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Employer registrations you will need

Minnesota — Income tax withholding: Minnesota Department of Revenue
Michigan — Unemployment insurance: Michigan Unemployment Insurance Agency (UIA)

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Get the form

MI-W4 — Michigan (official state source)

Michigan profile Minnesota profile Full write-up for this pair

Change the inputs

Withholding determination

Answer six questions. The result is a shareable link, so you can paste it into a ticket or an email.

Employee lives inState of residence

Work is performed inWhere the employee physically sits

Employer is based inWhere the work is directed from

Days in the work stateThis calendar year, leave blank if unknown

Wages from work-state daysUS dollars, leave blank if unknown

Arrangement Works remotely rather than at an employer location Remote work is an employer necessity, not employee preference

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This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.