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MI · payroll profile

Michigan

Everything an out-of-state employer needs before running a Michigan payroll: what to withhold, which form the employee signs, whether reciprocity applies, and who to register with.

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Personal income tax
Flat 4.25%
Reciprocal agreements
6 states
SUI wage base 2026
$9,000
Local income taxes
Yes

Income tax withholding

Imposes wage income tax Yes
Rate structure Flat 4.25%
Withholding certificate MI-W4
Employee's Michigan Withholding Exemption Certificate
Accepts federal Form W-4 No
Convenience-of-the-employer rule No
Nonresident withholding threshold From the first dollar
Withholding required from the first dollar of Michigan-source wages; no de minimis day or dollar safe harbor.
Local income taxes Yes
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.

Reciprocity

Michigan exempts residents of 6 states from Michigan withholding, provided the employee files MI-W4 with the employer.

IllinoisIndianaKentuckyMinnesotaOhioWisconsin
Confirmed in the 2026 Michigan Income Tax Withholding Guide (Form 446, rev. 02-26): Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. NOTE the 2026 guide states Michigan does not prescribe a dedicated reciprocity form -- an employer may accept the MI-W4 exemption line, develop its own certificate of nonresidency, or take a signed letter from the employee. Michigan is Minnesota's only reciprocal partner besides North Dakota.

States that exempt Michigan residents

A Michigan resident working in these states files that state's certificate and is taxed only by Michigan.

District of ColumbiaIllinoisIndianaKentuckyMinnesotaOhioWisconsin

Unemployment insurance and paid leave

Taxable wage base 2026 $9,000
2025 base was $9,000.
New employer rate 2.7%
Taxable wage base is $9,000 for contributing employers in good standing and $9,500 for delinquent employers. Construction new employers pay a higher industry-average rate.
Experience rate range 0.06% – 10.3%
Experience-rating method benefit ratio
Employee UI contribution No
Paid family / medical leave No

Employer registration

Tax agency
Michigan Department of Treasury
UI agency
Michigan Unemployment Insurance Agency (UIA)

Sources

michigan.gov · michigan.gov · michigan.gov · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov

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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.