Michigan payroll taxes for employers (2026)

Michigan payroll rules to plan around

City income taxes

Michigan has 24 cities that levy an income tax, and you withhold it separately from state tax. Detroit charges 2.4% to residents and 1.2% to nonresidents who work there; on a $50,000 salary that is $1,200 or $600 a year. The Michigan Treasury already processes Detroit returns and takes over Flint returns from January 1, 2027, starting with tax year 2026. We could not verify the full city list on the state page, so check each work site; our Michigan city income tax page has what we confirmed.

The 2027 wage step

The $13.73 minimum (employers with 2 or more employees) becomes $15.00 on January 1, 2027, then adjusts each year by formula. The tipped cash wage is $5.49 in 2026 and climbs each year until it reaches 50% of the minimum wage in 2031. If you have hourly staff near the minimum, your 2027 labor budget rises before any tax does. Compare across states in the minimum wage table.

Pay on discharge without delay

Under MCL 408.475, a discharged employee is paid immediately, as soon as the amount can with due diligence be determined, and an employee who quits is paid as soon as the amount can be determined. (Our source is a summary of the statute; read the text before you rely on it.) Michigan allows weekly, biweekly, semi-monthly or monthly pay depending on the type of work.

Workers comp has two triggers

You need coverage once you have 3 or more employees at one time, counting part-timers, or one employee who works 35 or more hours a week for 13 or more weeks in the prior 52 weeks.

Michigan employer payroll facts at a glance

Michigan employer registration checklist

1. Get an EIN; the UIA asks for it.
2. Register with the UIA through its online e-Registration application, linked from the UIA employers page. The UIA says MiWAM is being retired on November 9 and tax functions now run in MiUI.
3. Register for state income tax withholding with the Michigan Department of Treasury, and add city withholding accounts for any city where employees live or work.
4. Report new hires and rehires within 20 days of the first day of paid work. Electronic reporters send reports twice a month, 12 to 16 days apart.
5. Buy workers comp when you meet either trigger above.

What a $50,000 Michigan employee costs in taxes

Michigan's state unemployment line is $243 because the $9,000 base is used up early in the year. The employee's 4.25% state tax (after the $5,900 personal exemption) and any city tax are withheld from their check. Experience-rated employers pay between 0.06% and 12.2%; see the 50-state SUTA list.

Michigan payroll services and PEOs

The provider question in Michigan is city tax: ask whether it withholds and files for Detroit and the other levying cities, and whether it handles the Flint move to Treasury in 2027. OnPay lists federal, state and local filings in its $49 a month plus $6 per worker plan, and Gusto starts at $49 plus $6 per person (both checked October 16, 2026). Our payroll software scores cover more.

PEOs need a Michigan license from LARA under Act 370 of 2010, renewed each August 31, and LARA's Accela lookup shows license status. See Michigan PEO options and costs and ranked PEOs.