Michigan city income tax is levied by 24 cities, including Detroit, Grand Rapids, Lansing and Flint. If you employ people who live or work in one, you withhold it from their pay: the resident rate for people who live there, and a non-resident rate, half as high, for people who only work there. Remote work changes who owes it.
Which Michigan cities have an income tax
These are the 24 cities on the Michigan Department of Treasury’s list. Rates are for 2026; residents pay the first, non-residents who work in the city pay the second. Each city runs its own income tax office, except Detroit, whose tax Michigan Treasury runs.
| City | Residents | Non-residents |
|---|---|---|
| Albion | 1% | 0.5% |
| Battle Creek | 1% | 0.5% |
| Benton Harbor | 1% | 0.5% |
| Big Rapids | 1% | 0.5% |
| Detroit, Run by Michigan Treasury | 2.4% | 1.2% |
| East Lansing | 1% | 0.5% |
| Flint, Run by Michigan Treasury from January 1, 2027 | 1% | 0.5% |
| Grand Rapids | 1.5% | 0.75% |
| Grayling | 1% | 0.5% |
| Hamtramck | 1% | 0.5% |
| Highland Park | 2% | 1% |
| Hudson | 1% | 0.5% |
| Ionia | 1% | 0.5% |
| Jackson | 1% | 0.5% |
| Lansing | 1% | 0.5% |
| Lapeer | 1% | 0.5% |
| Muskegon | 1% | 0.5% |
| Muskegon Heights | 1% | 0.5% |
| Pontiac | 1% | 0.5% |
| Port Huron | 1% | 0.5% |
| Portland | 1% | 0.5% |
| Saginaw | 1.5% | 0.75% |
| Springfield | 1% | 0.5% |
| Walker | 1% | 0.5% |
Rates can change by city ordinance. Before you set up payroll for a new city, confirm the rate with that city’s income tax office (or Treasury, for Detroit).
Cities that do not have one
If a city is not in the table, it does not levy an income tax, and there is nothing to withhold for people who live or work there. That includes some of the state’s biggest employment centers, such as Ann Arbor, Troy, Warren, Dearborn and Kalamazoo. The tax comes from the City Income Tax Act, which applies to cities, so townships and villages do not have one.
Watch the mailing address. A postal address that says Grand Rapids or Lansing can belong to a home in a neighboring township, outside the city limits. What decides the tax is where the person actually lives and works, not the name on the envelope.
Resident vs non-resident rates
Michigan’s City Income Tax Act sets the standard: 1% for residents and corporations, and half that, 0.5%, for non-residents. Detroit, Grand Rapids, Saginaw and Highland Park charge more, as the law allows them to, but in all 24 cities the non-resident rate is half the resident rate.
- Residents owe the tax on all their income, including wages for work done outside the city.
- Non-residents owe it only on income earned in the city, which for an employee means pay for work physically done there.
Who you withhold for: residents, commuters and remote staff
The rule in the City Income Tax Act is that an employer doing business or maintaining an establishment in the city withholds the tax. So if your business has a location in a taxing city, or does business there even without one, you withhold for:
- Employees who live in the city, on all their pay, wherever they do the work
- Employees who live elsewhere, on the pay for work they do inside the city
For remote and hybrid staff, that means a split. Pay for days a non-resident works from home outside the city is not subject to that city’s tax. Detroit adds one more condition: you withhold from a non-resident when Detroit is their predominant place of employment, and then only on the pay for work done in the city.
| Line | Amount |
|---|---|
| Gross pay for the month | $5,000.00 |
| Share of work done in Detroit (3 of 5 days) | 60% |
| Pay subject to Detroit tax | $3,000.00 |
| Non-resident rate | 1.2% |
| Detroit tax withheld | $36.00 |
If the same employee lived in Detroit, all $5,000 would be taxed at the 2.4% resident rate: $120.00 a month. Both figures leave out the personal exemptions the employee claims on the city withholding certificate, which lower the tax a little; payroll software applies them.
Example only: a made-up employee. The figures follow the Detroit rates for 2026.
If your business has no location in a city and does no business there, the cities’ withholding rules generally do not require you to withhold for an employee who simply lives there. That employee settles up on their own city return instead. “Doing business” can be read broadly, so ask the city if you are unsure.
Detroit is the exception: Treasury says that an employee who works remotely from a home or other location in Detroit gives you a Detroit withholding obligation, even if your business has no other presence there. If you register to withhold voluntarily, you withhold from every employee who lives in Detroit. Treasury’s Detroit withholding filing page sets out both rules.
Each employee should give you the city’s own withholding certificate when they start, and a new one when they move. That is how you know which city, and which rate, applies.
Detroit: administered by the state
The Michigan Department of Treasury runs Detroit’s income tax. It has processed Detroit individual returns since the 2015 tax year and Detroit employer withholding since the 2017 tax year, along with Detroit corporate, partnership and fiduciary returns.
- Registration
- None of its own. A business registered for Michigan taxes files Detroit withholding under its federal employer identification number.
- How often you file
- Monthly, for every employer, since January 1, 2024, and payments are made electronically. Returns (Form 5323) are due the 15th of the following month and are filed even when no tax was withheld.
- Annual reconciliation
- Form 5321, due the last day of February. For 2026 that is March 1, 2027, because February 28 is a Sunday.
- Guidance
- Treasury’s City of Detroit Income Tax Withholding Guide, Form 5469, its Detroit employer withholding page and its Detroit filing and payment page.
Grand Rapids and the other cities: city-administered
The other cities run their own income tax offices, each with its own forms, deadlines and payment options. Grand Rapids is a typical example. Its guide for withholders sets out:
- A registration form for new withholding accounts and a city W-4 for each employee
- Payments monthly if you withhold more than $100 a month, otherwise quarterly
- Payments due the last day of the month after the period
- An annual W-3 reconciliation
Other city-run taxes follow the same shape with their own form names, so set each city up separately in payroll rather than copying one city’s settings to another.
Business net-profits tax
The same city taxes reach business profits, not only wages. A corporation pays a city corporate income tax on the share of its profit earned in the city. Partnerships file a city partnership return. A sole proprietor reports business profit on their own city return: all of it if they live in the city, or the part earned in the city if they do not. Treasury now handles these returns for Detroit and will for Flint from 2027; elsewhere they go to the city.
How Michigan city income tax shows up in payroll and the books
City tax on wages is withheld from the employee, not paid by the employer, so it is not a payroll cost to you. But it is your liability from payday until you send it in, and that is where books go wrong.
- Each employee set up in payroll with both their home city and their work city
- A separate liability account for each city, cleared when the return is paid
- Each liability reconciled to the city return every month or quarter
- City wages and tax shown in boxes 18 to 20 of each W-2
- A fresh check whenever someone moves house, changes office or goes remote
We run payroll services for employers with staff in more than one state or city, and city withholding is set up as part of that. City tax sits beside your state filings; for those dates, see our guide to Michigan sales tax filing.
Our page on bookkeeping services in Michigan covers the rest of what Michigan employers file. If you suspect city tax was never set up for some of your staff, add us as your accountant and we will check the payroll liabilities in a free books review. Nothing in your books changes.
Frequently asked questions
Does Ann Arbor have a city income tax?
No. Ann Arbor is not one of the 24 Michigan cities that levy an income tax, so there is no city tax to withhold for people who live or work there. They still pay Michigan state income tax.
Does Troy have a city income tax?
No. Troy does not levy one. An employee who lives in Troy but works in a taxing city, such as Detroit, still owes that city’s non-resident tax on the work done there.
Do I withhold city tax for remote employees?
For a remote employee who lives in a taxing city, yes, if your business has a location or does business in that city: residents are taxed on all their pay, wherever they work. For a remote employee who lives outside the city, pay for days worked outside it is not subject to that city’s tax. Hybrid staff need a split based on where the work is done. Detroit goes further: an employee working from home in Detroit is enough on its own to make you withhold Detroit tax.
Who collects Detroit city income tax?
The Michigan Department of Treasury. It has processed Detroit individual returns since the 2015 tax year and Detroit employer withholding since the 2017 tax year. A business registered for Michigan taxes files Detroit withholding under its federal employer identification number, with no separate registration.
What is the Grand Rapids non-resident rate?
0.75%, half the 1.5% resident rate. It applies to pay for work done inside Grand Rapids by people who live elsewhere, and it has been the rate since July 1, 2010.