Michigan Hourly Paycheck and Payroll Calculator

Michigan Hourly Paycheck Calculator

We will help you with some of the main payroll taxes in Michigan so you know what you are getting into. If you’d rather have someone else do it, payroll software or qualified accountants can take the lead.

Michigan payroll taxes

Here’s what you need to know about withholding payroll taxes in Michigan.

• Michigan payroll taxes start with employees filling out Form MI-W4. This information helps you determine how much you should withhold. 
• If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.
• The personal income tax rate in Michigan is 4.25%.
• Michigan has reciprocity with the following states: Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin.

Additional Michigan forms

Michigan employers also need to file the following forms:

1. Form 5080
2. Form 5081
3. Form 5321 (Detroit only) 

Michigan unemployment tax rate

Michigan requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own. 

• Employers pay Michigan unemployment tax on the first $9,500 of an employee’s wages.
• New employers in the construction industry pay at a rate of 6.8% to 8.1%.
• New employers who are not in the construction industry pay at a rate of 2.7%.
• Experienced employers pay at a maximum rate of 6.3%.
• Unemployment tax in Michigan should be filed and paid through Michigan Web Account Manager (MiWAM).

Paying Michigan taxes

Here’s what you need to know about paying Michigan taxes:

• How often employers pay depends on the amount of tax you withhold in a year. 
• Michigan’s payment frequencies are monthly or quarterly.

Other Michigan taxes

The  Michigan cities listed below levy an income tax on residents and nonresidents who work there. These taxes are typically 1% income tax on residents and .5% on nonresidents. The cities of Detroit, Grand Rapids, Highland Park and Saginaw have rates that differ from the rest. 

Business owners must register with the city/cities where your employees are working—and registration in each city is unique. Each city below is linked to the form that needs to be filled out and mailed in to register your employee(s). 

1. Albion – download the City of Albion Employer Registration Packet under Withholding
2. Battle Creek
3. Big Rapids
4. Detroit
5. East Lansing
6. Flint
7. Grand Rapids – download SS-4 Withholding Registration under Withholding Forms
8. Grayling
9. Hamtramck
10. Highland Park
11. Hudson: please call the city at (517) 448-8983
12. Ionia
13. Jackson
14. Lansing
15. Lapeer
16. Muskegon
17. Muskegon Heights: choose current year and download Tax Withholding Book
18. Pontiac
19. Port Huron
20. Portland
21. Saginaw
22. Springfield
23. Walker

At the time of writing, the 2023 tax rates have not been posted; keep an eye on the Michigan tax webpage for updates.

A quick note for Gusto customers: if you have multiple business locations in Michigan, each of your employees will have a “Predominant Work City” field in their Gusto profile. Employees must identify their predominant work city on the city’s W-4 by December 1 for the next calendar year.

Michigan minimum wage

In 2023, the minimum wage in Michigan is $10.10 per hour for businesses. Michigan allows employers to pay $4.25 per hour for the first 90 days to train new employees aged 16 to 19. You can pay employees aged 16 to 17 at 85% of the minimum wage. The 85% rate for minors aged 16 and 17 is $8.59 per hour. The tipped employee rate of hourly pay is $3.84 per hour.

Michigan overtime pay

Because Michigan doesn’t have any state law governing overtime pay, the federal rules under the Fair Labor Standards Act apply. Generally speaking, hourly employees are to be paid time-and-a-half for all hours worked over 40 hours in a week.

Workers’ Compensation

Requirements to obtain Workers’ Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information. 

New hires

Employers in Michigan need to report new employees.

• New hires must be reported to the Michigan New Hires Operation Center.
• New hires must be reported within 20 days of their first day of work. 

Payroll stubs

You must provide a pay stub to every employee that includes:

1. Company’s legal name and address
2. Employee’s name and last four digits of their Social Security number
3. Pay period beginning and end dates
4. Total hours worked
5. Rate of pay
6. Gross wages
7. The amount and reason for any deduction

Final paychecks

Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.

Time off

Michigan law requires employers to provide the following types of time off to employees.

• Jury duty
• Family & parental leave: Michigan employees are entitled to leave under federal law, FMLA.
• Sick and medical leave: The Paid Medical Leave Act applies to employers with 50 or more employees. 

Domestic violence leave under the Paid Medical Leave Act.

Federal payroll taxes

In addition to Michigan-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

1. You must withhold federal income tax from employees’ pay, unless they are exempt. 
2. Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.
3. Form W-4 does not need to be sent to the IRS, but should be kept for your records.

FICA

Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.

• FICA is made up of the Medicare tax and the Social Security tax. 
• In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages. In 2023, the wage base for this tax is $160,200. 
• The Medicare tax requires employers and employees to each contribute 1.45% of all wages. 
• See the IRS webpage for details, like maximum thresholds.

FUTA

Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.

• FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages. 
• The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.
• Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly. 

Additional Medicare tax

The Additional Medicare tax is paid by employees. Here’s what you should know:

• For employees who earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax. 
• Whether or not your employee owes this tax may depend on their filing status.

Paying federal taxes

How often you’ll pay federal payroll taxes depends on how much you owe.

• Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.
• Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

We’re here to help

If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.

Disclaimer

The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.