Michigan city income taxes, including Detroit

How Detroit's tax is set up

Residents

2.4%

Nonresidents working in Detroit

1.2%

Corporations

2.0%on business income

Wage cap

None

You withhold from Detroit residents and from nonresidents for their work in Detroit. Since tax year 2015, the Michigan Department of Treasury has processed Detroit returns for the city. At year end you file the DW-3 annual reconciliation with W-2 data online. The city's page does not give the periodic deposit schedule we would need to print here, so confirm it when you register with the Income Tax Division.

The rates and rules

Detroit math on $60,000

Living in the city costs this employee $720.00 more a year than commuting in. Detroit's own exemption rules were not on the pages we read, so the city figures assume none. None of this is employer cost; your share is FICA, FUTA and Michigan unemployment at 2.7% on $9,000, covered on the Michigan payroll tax page.

Flint moves to the Treasury in 2027

The Michigan Treasury will start processing Flint city income tax returns on January 1, 2027, for tax year 2026 and later, the same arrangement Detroit has had since 2015. If you have Flint employees, your 2026 year-end filing may go to the state rather than the city. Watch for Treasury instructions this winter, and use the Treasury's city withholding forms (the most recent set we found is labeled TY2025).

Finding the other taxing cities

1. Start with the Michigan Treasury's page on which cities impose an income tax (michigan.gov/taxes/citytax).
2. For each city where an employee lives or works, get the resident and nonresident rates from that city's income tax office.
3. Ask each city how it treats nonresidents who work partly inside and partly outside its limits.
4. Register with each city before the first payroll that includes a resident or a worker in the city.

Do not assume another city copies Detroit's 2.4% and 1.2% split. Get each city's own rates and keep the date you checked them.

Where Michigan city withholding goes wrong

• A move into or out of Detroit mid-year. The rate changes from 1.2% to 2.4% (or back) when residence changes. Record the date and change it in payroll the same pay period.
• Remote nonresidents. The 1.2% applies to nonresidents for work in Detroit. An employee who used to commute and now works from a suburb full-time changes your withholding; days in the office still count.
• Residents of a second taxing city. An employee can live in one taxing city and work in another. Both cities' rules apply, and credits between cities were not part of our research. Ask both.
• Treating city tax like state tax. Michigan state tax and city tax are separate withholdings with separate accounts.

Payroll software for Michigan cities

Before you rely on a provider, ask whether it files Detroit's DW-3 and the other cities' returns, or only withholds the tax. OnPay's pricing page says federal, state and local filings are included at $49 a month plus $6 per worker; SurePayroll charges extra for local tax areas without listing a price (both checked October 16, 2026). See our ranked payroll software, payroll taxes explained, SUTA rates by state, and compare Ohio's municipal income tax or the payroll tax hub.