Notice: 4.25% Income Tax Rate for Individuals and Fiduciaries in 2025 Tax Year

Individuals and fiduciaries subject to tax under Part 1 of the Income Tax Act, MCL 206.1 et seq., are subject to tax at the rate provided under Section 51 of the Income Tax Act, MCL 206.51. For each tax year beginning on and after January 1, 2023, the rate may be subject to a formulary reduction as provided by Section 51(1)(c) if there is a determination that the percentage increase in general fund revenue from the immediately preceding state fiscal year exceeded the inflation rate for the same period. That determination is required to be made jointly by the State Treasurer, the Director of the Senate Fiscal Agency, and the Director of the House Fiscal Agency based on financial data from the Annual Comprehensive Financial Report (ACFR).

According to data from the Fiscal Year 2024 ACFR, the general fund increased by 5.19% and inflation went up by 3.07%. These conditions require the application of the statutory formula to determine any potential rate reduction. After applying that formula, it has been determined there is no reduction of the Section 51 rate for the 2025 tax year. The rate in effect under Section 51 for the 2025 tax year is therefore 4.25%.

Author:

Bureau of Tax Policy

PO Box 30828, Lansing, MI 48909

Treas_Tax_Policy@michigan.gov