Are my wages earned in another state taxable in Michigan if I am a Michigan resident?

Yes.  If you are a Michigan resident, all of your income is subject to Michigan tax, no matter where it is earned, except income reported on federal schedule C, C-EZ, E or F earned from out-of-state business activity.

A Michigan resident may qualify for a non-refundable tax credit for tax paid to another government unit outside of Michigan, including:

  • A nonreciprocal state
  • A local government unit outside Michigan, including tax paid to a city located in reciprocal states
  • The District of Columbia
  • A Canadian province

The credit for taxes paid to another state is not available for:

  • salaries and wages earned in a state that has a reciprocal agreement with Michigan or
  • earnings not included in your Michigan taxable income

Residents of reciprocal states working in Michigan, do not have to pay Michigan tax on their salaries or wages earned in Michigan.  The following states have a reciprocal agreement with Michigan: Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin.

If a Michigan resident erroneously had income tax withheld for a reciprocal state on salaries and wages earned there, it is the Michigan resident's responsibility to file a nonresident tax return with that state to get a refund of the tax withheld in error.

Credit for Income Tax Imposed by Government Units Outside Michigan Estimator