Michigan employers withhold a flat 4.25% state income tax (2025 tax year), pay unemployment insurance on the first $9,000 of wages, may owe city income tax in 24 municipalities, and must provide earned sick time under ESTA.
Source last updated: 09/15/2025.
Overview
Michigan imposes a flat individual income tax and has locally imposed city income taxes in a number of municipalities, including Detroit and several other cities. Employers must also register and pay state Unemployment Insurance (UI) contributions to the Michigan Unemployment Insurance Agency (UIA). Michigan's recent statutory changes include a statewide Earned Sick Time requirement that took effect February 21, 2025.
State tax requirements at a glance
| Item | Michigan requirement |
|---|---|
| Individual income tax rate (2025 tax year) | 4.25%, flat |
| Withholding | Employers withhold state income tax from wages and remit to the Michigan Department of Treasury, following the withholding tables and guidance |
| UI taxable wage base (2025) | $9,000 for most qualified employers |
| Who pays UI | Employer-paid contributions administered by the UIA; UI is generally not an employee withholding |
| Statewide paid family and medical leave payroll tax | None separate from the Earned Sick Time Act |
Employer UI contributions are calculated on wages up to the taxable wage base. See UIA guidance for exceptions and qualification rules.
New hire reporting
Report new hires and rehires to the Michigan New Hire Reporting Center (Michigan New Hire Operation Center) within the required timeframes. See Michigan New Hire guidance for the form and electronic reporting options.
Local tax requirements
Several Michigan cities impose local income taxes: 24 cities have income tax ordinances, including Detroit, Grand Rapids, Lansing and Flint. Employers operating in those cities must register for city withholding and apply the correct city rates and resident/nonresident rules. Check the Michigan Department of Treasury city tax pages and the individual city income tax offices for rates and filing guidance.
Paid sick leave: the Earned Sick Time Act (ESTA)
Effective February 21, 2025, Michigan's Earned Sick Time Act requires covered employers to provide earned paid sick time. Accrual is at least 1 hour of earned sick time for every 30 hours worked.
| Employer size | Employer may limit paid use to |
|---|---|
| Small employers (10 or fewer employees, using the statutory definition) | 40 hours per year |
| All other employers | 72 hours per benefit year |
- Employers may frontload hours instead of tracking accruals. Frontloading and accrual rules, including carryover, waiting-period exceptions, documentation, and small-business start dates, are detailed in the Michigan LEO guidance and ESTA FAQs.
- Employers must post notices and maintain required written policies.
- Paid sick time must be paid at the greater of the employee's normal hourly or base wage, or the Michigan minimum wage.
Minimum wage
| Effective date | Michigan minimum wage |
|---|---|
| February 21, 2025 | $12.48/hr |
| January 1, 2026 | $13.73/hr |
| January 1, 2027 | $15.00/hr |
Michigan's rules allow certain youth and training wage provisions. See LEO materials for training wage and minor pay exceptions.
Overtime
Michigan follows the federal Fair Labor Standards Act (FLSA) for overtime: covered nonexempt employees must be paid 1.5 times the regular rate for hours worked over 40 in a workweek, unless a specific statutory exemption applies. Employers must apply the stricter of federal, state or local law where a local rule applies. For salary-basis and exemption tests, refer to DOL guidance.
Rest and meal breaks
Michigan law does not require adult private-sector meal or rest breaks beyond federal guidance. However, if an employer provides short breaks (typically around 20 minutes), those breaks are generally compensable under the FLSA. Employers should follow DOL guidance on bona fide meal periods and rest breaks, and comply with any minor or young-worker break requirements under state youth employment laws.
Final pay and pay frequency
Under Michigan's Payment of Wages and Fringe Benefits Act, an employer must pay all wages earned and due on the regularly scheduled payday for the period in which the termination occurs. Consult MCL and LEO for specific timing rules and exceptions.
Important: ESTA does not require payout of unused accrued sick time unless an employer's policy provides otherwise. Confirm company policies and state rules when calculating final pay and accrued PTO or sick payouts.
State-mandated retirement programs
Michigan currently does not have a fully implemented state-mandated private-sector payroll retirement program requiring employer automatic enrollment. Public-sector retirement systems exist for state and public school employees. Employers should monitor state announcements, including Michigan Treasury and state legislative updates, for any future mandatory program developments.
Wage deductions and garnishments
Employers must follow Michigan statutes on permissible payroll deductions and must comply with federal garnishment rules and court orders, including child support and tax levies. Voluntary deductions require proper written authorization. Consult Michigan statutes and Treasury/UIA guidance for forms and limits.
Recordkeeping and notices
Employers must maintain payroll, time and tax records per federal FLSA and Michigan recordkeeping requirements. ESTA and city income tax requirements can require employer postings and policy notices; employers should post the Michigan ESTA notice and required Treasury/LEO posters. Employers in local tax cities must also comply with city-level posting and withholding rules.
Youth employment and minimum age
Michigan's Youth Employment Standards Act sets the minimum age for most nonhazardous employment at 14 years, with defined exceptions and limits. Michigan also has training wage and minor pay provisions, so employers may pay reduced rates to certain young workers under specified conditions. Review MCL Act 90 and LEO materials for minor work-hour restrictions, prohibited occupations, and permit requirements.
Compliance updates
Resources and references
- Michigan Unemployment Insurance Agency (UIA) - UI employer resources, taxable wage base, UI taxes and MiWAM filing.
- Michigan Department of Labor and Economic Opportunity (LEO) - Earned Sick Time Act (ESTA) main page and FAQs.
- Michigan New Hire Reporting Center.
- Michigan Department of Treasury - city income tax pages and which cities impose an income tax.
- U.S. Department of Labor - FLSA overtime and breaks guidance, the federal baseline for overtime, hours worked, and meal/rest break treatment.
Frequently asked questions
What is Michigan's income tax withholding rate?
Michigan's individual income tax rate for the 2025 tax year is a flat 4.25%. Employers must withhold state income tax from employee wages and remit it to the Michigan Department of Treasury, following the state withholding tables and guidance.
What is Michigan's unemployment insurance taxable wage base?
For most qualified employers, Michigan's UI taxable wage base is $9,000 for 2025. UI contributions are employer-paid and administered by the Unemployment Insurance Agency; they are generally not an employee withholding.
Do Michigan cities have their own income taxes?
Yes. Twenty-four Michigan cities have income tax ordinances, including Detroit, Grand Rapids, Lansing and Flint. Employers operating in those cities must register for city withholding and apply the correct city rates and resident/nonresident rules.
How much earned sick time do Michigan employees accrue?
Under Michigan's Earned Sick Time Act, effective February 21, 2025, employees accrue at least 1 hour of earned sick time for every 30 hours worked. Employers other than small employers may limit usage to 72 hours per benefit year, and small employers (10 or fewer employees under the statutory definition) may limit paid use to 40 hours per year.
What is Michigan's minimum wage?
Michigan's minimum wage is $12.48 per hour effective February 21, 2025, rising to $13.73 on January 1, 2026 and $15.00 on January 1, 2027. Under the Earned Sick Time Act, paid sick time must be paid at the greater of the employee's normal hourly or base wage or the Michigan minimum wage.
