Withholding Taxes: Michigan

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Michigan residents are subject to income tax on all taxable income from any source. Michigan residents who work temporarily in another state are subject to Michigan income tax on wages paid for work done in that state. Nonresidents who perform services in Michigan are subject to Michigan income tax, unless the nonresident's state of residence has a reciprocal agreement with Michigan. See Withholding on Residents, Nonresidents and Expatriates.
• Michigan employers must use Form MI-W4, Michigan Employee's Withholding Exemption Certificate, to determine withholding. The federal Form W-4 is not an acceptable substitute. See Employee's Withholding Exemption Certificate.
• Withholding on supplemental wages, such as bonuses, is determined differently depending on whether they are paid at the same time as, or separate from, regular wages. See Supplemental Wages.
• All employers must provide each employee (both current and terminated employees), an annual Form W-2, Wage and Tax Statement, before January 31 of the following year. See Form W-2 Requirements.
• Employers must keep all records pertaining to the state income tax available for inspection by the Department of Treasury for at least six years. See Recordkeeping Requirements.
• Localities including Detroit, Grand Rapids and Lansing have requirements pertaining to income tax withholding. See Local Requirements.