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Michigan combines a variable flat income tax (4.25% standard, subject to annual revenue triggers), 22 cities with local income taxes led by Detroit, and the PMLA sick leave mandate. Rippling handles MI Treasury, UIA, and city income tax compliance.
Michigan is the center of the US automotive industry and has a growing technology, advanced manufacturing, and life sciences sector in Detroit, Ann Arbor, Grand Rapids, and Lansing. Michigan payroll has two notable complexity areas: a flat income tax with an annual revenue-trigger rate variation (standard 4.25%, may temporarily decrease), and 22 cities with local income taxes (Detroit at 2.4% for residents being the most impactful). The Michigan PMLA provides paid sick leave for employees of 50+ employee companies.
Rippling’s Michigan payroll module provides:
| Contribution | Rate | Notes |
|---|---|---|
| FUTA | 6.0% (net 0.6%) | After SUTA credit; first $7,000 |
| Michigan SUTA (UIA) | New employer 2.7% | On first $9,500 of wages (2024) |
| Social Security | 6.2% | Up to $168,600 (2024) |
| Medicare | 1.45% | No wage base limit |
| Workers’ Compensation | Varies by risk class | Mandatory per threshold (3 employees or 1+ at 35+ hours for 13+ weeks) |
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| Contribution | Rate | Notes |
|---|---|---|
| Federal Income Tax | Graduated 10–37% | Per W-4 |
| Social Security | 6.2% | Up to $168,600 (2024) |
| Medicare | 1.45% + 0.9% surtax | Surtax above $200K single |
| Michigan State Income Tax | 4.25% flat (standard) | Subject to annual revenue trigger (was 4.05% in 2023) |
| City Income Tax | 1–2.4% (residents); 0.5–1.2% (non-residents) | Detroit: 2.4%/1.2%. 22 Michigan cities have local income tax. |
| Michigan Income | MI Rate |
|---|---|
| All income (2024) | 4.25% flat (standard rate) |
Michigan flat income tax. Rate may be temporarily reduced in years when state revenue exceeds constitutional trigger (was 4.05% in 2023). City income taxes withheld separately per work location city. Remitted to MI Treasury via Form 5080 (monthly). Annual reconciliation via Form 165.
Final Pay: Michigan requires final pay on the next regularly scheduled payday. No immediate payment requirement. Accrued vacation: no Michigan statute requires PTO payout; a written employer policy clearly stating forfeiture is generally enforceable.
WARN Act: Federal WARN Act applies (100+ employees). No separate Michigan WARN law.
Michigan’s flat income tax rate is 4.25% standard. It was temporarily reduced to 4.05% for 2023 due to a revenue trigger provision (state revenue exceeded a constitutional threshold). For 2024 it reverted to 4.25%. Michigan’s constitution requires the income tax rate to be reduced in years of excess revenue. Rippling updates the Michigan withholding rate annually as official guidance is issued.
22 Michigan cities levy a city income tax. The most significant is Detroit: 2.4% for residents working in Detroit; 1.2% for non-residents working in Detroit. Other cities include Grand Rapids (1.5%/0.75%), Lansing (1%/0.5%), and Flint (1%/0.5%). Employers must withhold city income tax based on where the employee works. Rippling tracks Michigan city income tax by employee work location.
Michigan’s PMLA requires employers with 50 or more employees to provide eligible employees with up to 40 hours of paid medical leave per year. Accrual: 1 hour per 35 hours worked, or front-loaded. Leave can be used for employee or family member illness, domestic violence/sexual assault, or school/workplace closure due to public health emergency. Rippling tracks PMLA accrual for Michigan employees.
Michigan’s minimum wage is $10.33/hour (January 2024, indexed to CPI). Tipped employees: $3.93/hour direct wage (tip credit). Michigan has a scheduled phase-out of the tip credit — by 2030 tipped employees will receive the full minimum wage. All Rippling payroll employees are paid at or above the applicable minimum wage.
