Michigan Payroll Compliance
Every rate, wage base, and local tax layer Michigan employers need for 2026 — sourced from the Dept. of Treasury and LEO — including the court-mandated minimum wage ramp, the Earned Sick Time Act, and Detroit’s 2.4% city income tax.
Minimum Wage & Hours
Michigan’s minimum wage is on a court-mandated accelerated schedule following the Michigan Supreme Court’s July 2024 ruling that restored the original 2018 voter initiative. The rate jumped to $12.48 in February 2025 and is now $13.73/hour for 2026, heading to $15.00 by January 2027.
| Item | 2026 Value | Notes |
|---|---|---|
| Standard minimum wage | $13.73/hr | Effective Jan 1, 2026 under the restored IWOWA |
| Tipped cash wage | ~38% of standard | Verify current exact figure via LEO — ramp schedule applies |
| Youth wage (16–17) | $11.67/hr | 85% of the standard rate |
| Training wage | $4.25/hr | Under-20 employees, first 90 calendar days only |
| Next scheduled increase | $15.00 (Jan 2027) | Final step of the court-restored schedule |
| Overtime rule | 40 hrs/week | Federal FLSA; no daily overtime trigger in Michigan |
Local City Income Tax
Twenty-four Michigan cities levy their own income tax on top of the state’s flat 4.25%. Detroit runs the highest at 2.4% for residents (1.2% for non-residents), creating a combined 6.65% rate — the highest in the state. Non-resident rates are always half the resident rate.
| City | Resident Rate | Non-Resident Rate |
|---|---|---|
| Detroit | 2.4% | 1.2% |
| Grand Rapids | 1.5% | 0.75% |
| Lansing | 2.0% | 1.0% |
| Flint | 1.0% | 0.5% |
| Saginaw | 1.5% | 0.75% |
State Income Tax Withholding
Michigan uses a flat 4.25% rate with a personal exemption of $5,900 per allowance (up from $5,800). There is no standard deduction — only the personal exemption reduces taxable income.
| Item | 2026 Value | Notes |
|---|---|---|
| Flat rate | 4.25% | Confirmed in Form 446 for 2026; applies to all income levels |
| Personal exemption | $5,900 | Up from $5,800 in 2025 |
| Required certificate | Form MI-W4 | Michigan-specific |
| Reciprocity | IL, IN, KY, MN, OH, WI | Broadest reciprocity list in the Midwest |
Earned Sick Time
The Michigan Earned Sick Time Act took effect February 21, 2025 for large employers and October 1, 2025 for small employers — restored by the same Supreme Court ruling that accelerated the minimum wage. Michigan has no state paid family/medical leave or state disability insurance.
| Item | Value | Notes |
|---|---|---|
| Accrual rate | 1 hr / 30 worked | All covered employers |
| State PFML | None | No payroll contribution |
| State disability insurance | None | No state-run program |
Unemployment Insurance (SUI)
| Item | 2026 Value | Notes |
|---|---|---|
| SUI wage base | $9,500 | Per employee, per year |
| New employer rate | 2.7% | Standard initial rate |
| Experienced range | 0.06% – 10.30% | Based on Chargeable Benefits Component (CBC) |