Michigan Income Tax Rate Stays at 4.25 Percent as State Officials Determine No Reduction Needed for 2026 Tax Year
Michigan income tax rate stays at 4.25 percent for 2026 as state officials determine general fund did not grow faster than inflation
Michigan taxpayers will see no relief on income taxes in 2026. State officials announced the individual income tax rate will remain at 4.25 percent for the coming tax year.
State Treasurer Rachael Eubanks, Senate Fiscal Agency Director Kathryn Summers and House Fiscal Agency Director Mary Ann Cleary made the determination jointly on April 15. They published their statutorily required calculation following the release of Michigan's Annual Comprehensive Financial Report for Fiscal Year 2025.
The report covered the period from October 1, 2024 to September 30, 2025.
After completing this year's analysis, the results show that the conditions for an income tax rate reduction were not met. As a result, the individual income tax rate for the 2026 tax year will remain at 4.25 percent, Eubanks said.
The determination is based on data from the state fiscal year that ended September 30, 2025. Total general fund revenue decreased by 1.56 percent during that period while the rate of inflation was 2.70 percent.
Since general fund spending did not exceed inflation, state law did not require officials to apply the statutory formula to determine a potential rate reduction. The officials determined a rate adjustment calculation was not necessary.
Michigan enacted a law in 2015 requiring a reduction of the state individual income tax rate if the general fund grew faster than the rate of inflation in any year starting with the 2023 tax year.
The individual income tax rate fell in 2023 when state officials determined the required conditions had been met. But it increased back to 4.25 percent for the following year.
Michigan Court of Appeals ruled in 2024 that any reduction triggered by the 2015 tax law is temporary and must be revisited after one year.
The 2026 tax year means West Michigan residents and businesses will continue paying the same rate on their income. For families across Kent County, Ottawa County, and Muskegon County, this means no reduction in their tax burden despite the state's financial conditions.
The Annual Comprehensive Financial Report for FY 2025 can be found on the State Budget Office website. Additional details about the individual income tax rate calculation can be found in a taxpayer notice issued by the Michigan Department of Treasury.
Sources
AI-assisted reporting