Paycheck Calculator Michigan - MI

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Michigan - MI Paycheck Calculator: Hourly and Salary

Michigan, a state located in Midwestern regions of the United States, in the Great Lakes. From Ford automobiles by Henry Ford to fantastic music by Stevie Wonder, this state has such an innovative past.

The Great Lakes state has so much more to offer to its residents than just cars and beautiful landscapes. So if you're considering a move to this lively Wolverine State and start a new career, ensure that you are aware of all pros and cons.

Lucky for you, we will provide you some of the essential detail for moving to this state. Moreover, after moving, the foremost thing is to establish a reasonable source of income through a job or small business. For both sources, paycheck calculation is a must as this is used to determine the take-home pay for an employee and also the employment cost during profit calculation in a small business.

Wherefore, this guide also includes all the necessary details, including Payroll facts, laws, and steps for Michigan Paycheck calculation, which is also helpful for comparing different job offers in the state.

The thing you must know about Michigan:

Whether you are offered a new job or planning to try your luck in a small business in this bustling Great Lakes state, following are the points you must consider before relocating:


Housing

The first thing that comes to our mind about moving to a new place is accommodation. It is whether to buy it or rent it. Housing in Michigan is affordable, which is ranked on 5th across the nation by researchers. Wherefore, you are suggested to buy it, as the median home value is $138,747, which is comparatively cheap than other states. However, renting is also not a bad idea, as the Median Rental Expense for single bedroom is $721, and for a double bedroom is around $922.


Cost of Living:

Living in this state is slightly cheaper, with the cost of living index of 89.7, which is relatively lower than the nationwide index of 100 points. Housing cost in the state is the smallest, transportation cost is higher, whereas other factors, including utilities, food, grocery, and health are neither expensive nor cheap as compared with other states.


Outdoor Activities:

Life is not just about having a beautiful house or a high paying job. It is also about enjoying and spending your free time with your family and friends. Moving to Water Winter Wonderland can open up so many outdoor opportunities to explore, including lakes, rivers, pristine beaches, lush forests, state parks, county parks, golf courses, and ski hills. Moreover, there are also some of the other must-visit tourist destinations like amazing Detroit city, Mackinac Island, Isle Royale National Park, Sleeping Bear Dunes National Lakeshore, and Henry Ford Museum of American Innovation.


Education:

From the University of Michigan in Ann Arbor to Central Michigan University, this state is home to some of the top universities across the nation with 21st highest public-school spending and ranked #33 in the country for "states with best schools" by USA Today. Moreover, The Great Lakes State also houses several prominent liberal arts colleges, including Hope College and Hillsdale College.


Job and Business Opportunities:

Currently ranked on number 19 for economy among other states, Michigan State is now reviving from the former economic crisis that resulted in a significant rise in unemployment. Presently, the state is ranked 23rd overall for best states for jobs and economic opportunities and have the unemployment rate of 4.7%, which is quite close to the national average. Some of the leading business and job opportunities lie within the industries like Medical Devices, Cybersecurity, Healthcare, tourism, and defense.

As we are done with some the before-moving-to Michigan facts, now let's discuss some of the payroll facts that are going to be helpful for our main topic of "Michigan Paycheck Calculation."


Michigan Payroll Facts:

  • Michigan Residents are charged with federal payroll taxes that include Federal Income tax and FICA tax. Federal Income tax is charged on a paycheck, at the rates ranging from 10% to 37%, with seven tax brackets, depending on filing status and income level. Whereas the FICA tax of (6.2% social security + 1.45% Medicare) is charged on the employee's paycheck, and the matching amount is to be paid by the employer. Few more federal payroll taxes are discussed in detail ahead.
  • Besides, Federal Payroll Taxes, the Michigan residents are also required to pay State Payroll Taxes that includes State income tax and State Unemployment Insurance (SUI) tax.
  • The state income tax is charged at a flat rate of 4.25% on the employee's paycheck. The supplemental wages are also charged at the same rate.
  • The State Unemployment Insurance (SUI) tax is to be paid by employers only, at the rate ranging from 0.06% to 10.3%, on the first $9500 earned by each employee. However, new construction employers have to pay a flat rate of 8.2%, whereas other new employers are given considerable relief as they are only charged on a flat rate of 2.7%.
  • Residents of any one of the 24 cities in Michigan are also entitled to pay local income tax, ranging from 1% to 2.4%. However, non-residents working in any one of these 24 cities are required to pay half the rate for residents in all cities.
  • The Federal Minimum Wage rate is $7.25 for non-exempted employees, and the Federal Cash Minimum Wage rate for Tipped employees is $2.13, according to FLSA Law.
  • The Michigan Minimum Wage rate is $9.65 (January 2020 onwards) for non-exempted employees, and Cash Minimum Wage for Tipped employees is $3.67, with a maximum tip credit of $5.98.
  • The Minimum overtime pay in Michigan is $14.48 per hour, as the state requires the employers to pay overtime to non-exempted employees, at one and half times a regular hourly rate, for each excess hour worked after 40 hours in a workweek.
  • Workers from reciprocal states working in Michigan, don't have to pay Michigan income taxes on salaries and wages, as the state has a Reciprocal Agreement with Indiana, Minnesota, Wisconsin, Illinois, Kentucky, and Ohio.
  • The average livable wage in Michigan for a single adult is $11.29, and for a couple (one working) with two children is $24.20.
  • The Average Annual Salary in Michigan is $58,341, and the average hourly wage is $28. According to ziprecruiter.com.
  • The median household income in Michigan, according to the United States Census Bureau, is $54,938.

How to calculate Take Home Pay?

As we are done with relocation to Michigan and its payroll facts, now it's time to calculate paycheck. This paycheck calculation can help you compare different job offers, your take-home pay from your job in Michigan, or your employment cost as an employer.

Step 1 - Calculating Gross Pay:

The very first step to calculating the paycheck amount is to determine Gross Pay. It is a wage that an employee earned in the last pay period.

Gross Pay is calculated differently for both hourly and salary-based employees, which is discussed in detail as follow:

Gross Pay for Hourly Employee

Hourly Employees are paid at a mutually agreed pay rate for each hour they work in a pay period. Usually Pay periods for Hourly employees are Hourly, Daily, Weekly, and Bi-Weekly. However, the Federal, State, and Local Wage law requires the employers to set the pay rate equals to or more than the defined Minimum Wage Law for the non-exempted employees.

Hourly employees are also entitled to receive overtime, for each excess hour worked after regular hours in a workday or a workweek. Remember, like Minimum wage, the employers are also required to follow Overtime wage law provided by the federal, state, or local authorities.

Note: All the relevant laws are discussed in detail ahead.


To calculate gross wage for an hourly employee:

  1. Calculate total hours worked in a Pay Period using the data from Timesheet or Timecard.
  2. Multiply Total Hours worked with the Hourly Rate (Pay Rate).
  3. Add overtime hours (if any) worked by the employee.

Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.


Gross Pay for Salaried Employee

Salaried Employees are paid at the flat amount rather than on an hourly basis. The amount is usually mutually agreed as an Annual Salary, which is then paid in Semi-monthly or Monthly Pay periods.

Salaried employees are mostly exempted from overtime law. However, their salaries must be according to Federal and State Minimum Wage law.

To calculate Gross Pay for Salaried Employees:

  • Divide the "employee's salary" by "number of pay periods." For example: If the employee's annual salary is $25000 and is paid on a semi-monthly pay period, then the employee's Gross Pay would be: $25000 / 24 = $1042.

Don't forget that Supplemental Wages like Bonuses, commissions, tips, paid leaves, fringe benefits, or other taxable wages earned by the employee must be added into the Gross wages.


Step 2 – Subtracting Pre-Tax Deductions (If Any):

Once you are done with Gross Wages, it's time to subtract any Pre-Tax deductions from the gross wage to get taxable wages as Pre-tax deductions are not taxable for federal payroll taxes.

Pre-tax deductions are offered to the employees as benefits like fringe benefits, HSA plans, etc., to reduce their taxable income, hence, increasing their take-home pay amount. Remember, not all benefits are exempted from taxes, so choose the pre-tax deductions wisely.

Some of the common pre-tax deductible benefits are:

  • FSA - Flexible Spending Accounts
  • HSA - Health Savings Accounts
  • Retirement savings accounts like a traditional 401(k)
  • Some of the Fringe Benefits
  • health insurance
  • accident insurance
  • dental and vision insurance
  • Commuter Benefits
  • Short-Term Disability

Note: Pre-Tax deduction rate, contribution limits, special tax withholding rules change from year to year, according to inflation and costs of living by the federal government. Therefore, you must keep yourself updated with all rates before making any deductions.

Many Taxpayers find it hard to itemize their deductions to calculate taxable wages, for which they go for standard deductions, that varies according to the filing status, as shown in the table below:

All Filers(Updated Dec 2019)
Filing Status Standard Deduction Amount
Single Filers $12,200
Married, Filing Jointly $24,400
Married, Filing Separately $12,200
Head of Household $18,350

Step 3 – Calculate and Subtract Federal Taxes:

Once you have determined the taxable wages, it's time to deduct Federal Income taxes for the Taxable wages.

IRS requires the employers to withhold federal income tax from the employee's paycheck, according to the details provided by the employee on Form W-4. The employee fills this form at the start of the job. The form includes all the necessary information, including income, number of allowances to claim, number of dependents, amount of additional taxes to deduct, and much more.

The employees are required to keep their Form W-4 up to date with all their current information, especially marriage, divorce, or child's birth.

The federal income tax is charged according to the tax brackets in which the taxpayer's income falls. The latest income tax brackets and rates are as follow:

Single Filers
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Married, Filing Jointly
Taxable Income Rate
$0 - $19,400 10%
$19,400 - $78,950 12%
$78,950 - $168,400 22%
$168,400 - $321,450 24%
$321,450 - $408,200 32%
$408,200 - $612,350 35%
$612,350+ 37%

Married, Filing Separately
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $306,175 35%
$306,175+ 37%

Head of Household
Taxable Income Rate
$0 - $13,850 10%
$13,850 - $52,850 12%
$52,850 - $84,200 22%
$84,200 - $160,700 24%
$160,700 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Step 4 – Deduct FICA Taxes:

Besides, Federal Income Tax, the IRS also requires the employer to withhold FICA tax (15.3%) for the employee's paycheck and also requires the employer to pay a matching amount for each employee.

Federal Insurance Contributions Act (FICA) Taxes comprises of two types of taxes which are as follow:

  1. Social Security:

A total of 12.4% of social security tax is charged from which 6.2% is withheld from the employee's gross, and the employer pays the matching 6.2%. However, Social Security is only charged on the maximum taxable earnings of $137,700 for 2020.

  1. Medicare:

A total of 2.9% of Medicare is charged, from which 1.45% is withheld from the employee's gross, and the employer pays the matching 1.45%. Unlike Social Security, there is no maximum table earning limit for this tax. However, an additional surtax of 0.9% is charged as Additional Medicare Surtax on the employees having income over the specified level along with filing status, which is as follow:

Income Over Filing Status
$250,000 Married Filing Jointly
$125,000 Married Filing Separately
$200,000 Single

Note: Employers are not required to pay a matching amount for Additional Medicare Surtax.


Step 5 – Payment of FUTA Taxes

IRS requires the employer to pay another tax, known as The Federal Unemployment Tax Act (FUTA) Tax. This tax is paid at the rate of 6% on the first $7000 earned by each employee in a year. However, the IRS doesn't require the employees to contribute to it.

The employers who pay State Unemployment Insurance (SUI) tax in full and on time are given relieving FUTA tax credit of up to 5.4%, which saves a whopping 90% from FUTA Tax.


Step 6 – Subtract Post-Tax Deductions (If any):

Post-tax deductions (after-tax deductions) is an amount the employer takes out from the employee's paycheck after taxes. Therefore, it does not affect taxable wages and the amount of tax payable.

Here are some of the types of post-tax deductions that employee may voluntarily choose:

  • Charitable contributions
  • Disability insurance
  • Garnishments
  • Specific Retirement Plans like Roth 401(k)
  • Life Insurance

Step 7 – Withhold State Payroll Taxes:

As you are done with Federal Payroll Taxes, now it's time to discuss State Payroll Taxes. The very first State Payroll Tax is State Income Tax charged by Michigan State on employee's paycheck. Another one is State Unemployment Insurance (SUI) tax that is to be paid by the employers only.


Michigan State Income Tax

Like Federal Income tax, Employers are required to withhold State Income tax from the employee's paycheck, at the flat rate of 4.25%. This tax should be charged according to the details, including the number of allowances to claim, a number of dependents, additional state withholding amounts, etc. provided by the employee in Form MI-W4. Besides Form W-4, this form must also be updated regularly by the employee, especially on significant events like marriage, child's birth, or divorce.


State Unemployment Insurance (SUI) Tax

The State Unemployment Insurance (SUI) Tax is an employer-funded program that provides temporary income to unemployed workers who have lost their job without fault of their own.

The employers pay the tax at the rate ranging from 0.06% to 10.3%, on the first $9500 earned by each employee. However, new construction employers have to pay a flat rate of 8.2%, whereas other new employers are given considerable relief as they are only charged on a flat rate of 2.7%.


Step 8 – Withhold Local Payroll Taxes:

Along with Michigan State Payroll Taxes, 24 cities in Michigan charge an additional income tax ranging from 1.0% to 2.4% for Michigan residents. However, non-residents working in any one of these 24 cities are required to pay half the rate for residents in all cities.

The cities and their Local Income Tax rates are as follow:

City Income Tax Rate
Albion 1.00%
Battle Creek 1.00%
Benton Harbor 1.00%
Big Rapids 1.00%
Detroit 2.40% (1.20% for non-residents)
East Lansing 1.00%
Flint 1.00%
Grand Rapids 1.50% (0.75% for non-residents)
Grayling 1.00%
Hamtramck 1.00%
Highland Park 2.00% (1.00% for non-residents)
Hudson 1.00%
Ionia 1.00%
Jackson 1.00%
Lansing 1.00%
Lapeer 1.00%
Muskegon 1.00%
Muskegon Heights 1.00%
Pontiac 1.00%
Port Huron 1.00%
Portland 1.00%
Saginaw 1.50% (0.75% for non-residents)
Springfield 1.00%
Walker 1.00%

Step 9 – Calculate Pay Check:

Now that you are done with all payroll taxes and calculated the net take-home pay of an employee, it's time to cut the paycheck. Moreover, you, as an employer, must pay your portion of FICA tax along with FUTA and SUI tax in full and on time regularly.


Federal and Michigan Payroll Laws:

  1. Michigan state requires the employers to maintain any of the following pay frequencies:
    • Monthly (once a month)
    • Semi-monthly (twice a month)
    • Bi-Weekly (Once every two weeks)
    • Weekly (Once every week)
    • OR more frequently
  2. The state also requires the employer to maintain regular paydays for last pay periods, with maximum lag time, as follow:
    • For Semi-Monthly: the wages earned on the first 15 days of a month must be cleared on the same month or before the 1st day of the following month. Moreover, the wages earned on the last 15 days of the month must be paid before the 15th of the following month.
    • For Weekly or Bi-Weekly: the wages earned must be paid before 14 days after the pay period ends.
    • For Monthly: The wages earned must be paid by the 1st of the following month.
  3. Michigan Law doesn't require the employers to provide either paid or unpaid leaves, including vacation days, holidays, sick days, or personal paid time off days. However, if the employers voluntarily offer such benefits to their employees, then it must fulfill the terms of the employment contract or the employer's established policy. However, there is an exception of FMLA Law by federal that requires the employer (having 50 or more employees) must provide qualifying employees with a leave of as much as 12 weeks of unpaid days each year.
  4. The Federal Minimum wage for un-exempted employees is $7.25 / hour, and the Michigan Minimum wage rate is $9.65 (January 2020 onwards), for which employers are required to pay the highest among them. Some employees are exempted from minimum wage law, which is as follow:
    • Tipped Employees: The federal law needs to pay them a cash minimum wage rate of $2.13, with a maximum tip credit of $5.12, whereas, the Michigan state requires to pay $3.67, with a maximum tip credit of $5.98. Therefore, employers are required to pay a higher one.
    • Minor Employees: Youth age 17 or less are allowed to be paid 85% of the standard minimum wage.
    • Trainees: Employees age 18 and 19 are allowed to be paid a sub-minimum training wage of $4.25 per hour for the first 90 days of employment.
  5. Both Federal and Michigan State requires the employers to pay overtime to their non-exempted employees at the time, and half of the regular hourly rates for each excess hour worked after 40 hours in a workweek. However, executive, administrative, and professional employees are exempted from overtime law by federal and state. Moreover, there are some other employees that at exempted either under FLSA or Michigan law, for which you must refer to their official sites.
  6. Michigan Law requires the employers to provide "under eighteen" employees with a thirty-minute rest period if scheduled to work more than five uninterrupted hours. However, the state doesn't entitle the employers to provide meal and rest breaks to employees of age 18 or more.

FAQs

Answer: These are the payroll taxes taken out of the employee's paycheck in Michigan:

  1. Federal Income Tax: This tax is charged at a rate ranging from % to 37%, with seven tax brackets depending on income level and filing status.
  2. FICA Tax – Social Security: This tax is charged at a rate of 6.2%. However, Social Security is only charged on the maximum taxable earnings of $137,700 for 2020.
  3. FICA Tax – Medicare: This tax is charged at a rate of 1.45%.
  4. FICA Tax – Additional Medicare: If the annual income of the taxpayer exceeds the defined threshold, then an additional surtax of 0.9% is charged.
  5. State Income Tax: This tax charged at a flat rate of 4.25%.
  6. Local Income Tax: 24 cities in Michigan charge a Local Income tax ranging from 1.0% to 2.4% for Michigan residents. However, non-residents working in any one of these 24 cities are required to pay half the rate for residents in all cities.

Answer: The Average Annual Salary in Michigan is $58,341, and the average hourly wage is $28. According to ziprecruiter.com.

Answer: "Retail Salespersons" is the most common job which employs 146,550 people in Michigan, according to the report published by BLS in April 2019.

Answer: The Michigan Minimum Wage rate is $9.65 (January 2020 onwards) for non-exempted employees, and Cash Minimum Wage for Tipped employees is $3.67, with a maximum tip credit of $5.98.

Answer: The average livable wage in Michigan for a single adult is $11.29, a single adult with one child is $23.29, and for a couple (one working) with two children is $24.20.

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