You may use our free Michigan paycheck calculator to calculate your take-home pay by entering your period or yearly income along with the necessary federal, state, and local W4 data. Michigan is a flat-tax jurisdiction with a 4.25% state income tax. Besides, 24 cities in Michigan levy local income tax up to 2.4%.
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.
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:
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.
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.
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.
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.
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."
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.
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:
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:
Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.
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:
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.
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:
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:
Filing Status | Standard Deduction Amount |
---|---|
Single Filers | $12,200 |
Married, Filing Jointly | $24,400 |
Married, Filing Separately | $12,200 |
Head of Household | $18,350 |
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:
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% |
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% |
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% |
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% |
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:
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 2023.
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.
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.
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:
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.
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.
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%.
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% |
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.
Answer: These are the payroll taxes taken out of the employee's paycheck in Michigan:
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 2023 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.