Michigan Salary Paycheck and Payroll Calculator

Michigan Salary Paycheck Calculator

Processing payroll in Michigan is relatively straightforward. However, complying with the various city income tax laws makes withholding and paying withholding taxes complicated. We will help you with the knowledge you need to calculate your employees’ paychecks and your payroll taxes correctly. Here you will find answers to the most frequently asked Michigan payroll questions.

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

In addition to Form MI-W4 mentioned above, 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 should be filed and paid through the Michigan Web Account Manager.

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 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

2. Battle Creek

3. Big Rapids

4. Detroit

5. East Lansing

6. Flint

7. Grand Rapids

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

18. Pontiac

19. Port Huron

20. Portland

21. Saginaw

22. Springfield

23. Walker

Michigan salary threshold

Because Michigan doesn’t have its own salary threshold, it adheres to the federal salary threshold.

• The federal salary threshold is now $684 per week on a salary basis or on an hourly basis at a rate not less than $27.63 an hour.

• The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%).

• Employees who earn at least $107,432 per year may qualify as 'highly compensated.'

• See this Department of Labor fact sheet for details.

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 exiting employees by the next scheduled payday.

Time off

Employers are generally to provide the following types of time off to employees (restrictions and details may apply):

• Jury duty

• Family & parental leave

• Sick leave

• Medical leave

• Domestic violence leave

Federal payroll taxes

n 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.

• You must withhold federal income tax from employees’ pay, unless they are exempt.

• 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.

• 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 up to $2,600.

• 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 that 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.