MI Individual Income Tax Rate Will Return To 4.25% In 2024: Treasurer

MICHIGAN — Michigan's individual income tax rate will rise from 4.05 percent back to 4.25 percent in 2024, according to the Michigan Department of Treasury.

The change was needed because Michigan's general feud declined 8.3 percent from $15.3 billion in 2022 to $14 billion in 2023, and inflation grew 5.06 percent, according to the treasurer's office.

"As anticipated, we found that the conditions were not present for a rate reduction for the 2024 tax year," Michigan Treasurer Rachael Eubanks said. "The tax rate will remain at 4.25 percent."

The individual income tax rate can drop if the general fund grew faster than the rate of inflation in a fiscal year, according to a state law passed by a Republican-controlled legislature in 2015.

Since the general fund outpaced inflation during the Michigan's 2022 fiscal year, the state individual income tax rate dropped to 4.05 percent for the 2023 tax year, saving Michiganders roughly $700 million, according to the treasurer's office.

But Michigan Republicans argued they intended the tax relief formula to be based off the new rate each year, but a judge sided with Attorney General Dana Nessel in that the reduction should be based on the original rate of 4.25 percent annually. Republicans plan to appeal the decision.