Compensation

City of Detroit income tax must be withheld from:

• All compensation (salaries, wages, commissions, severance pay, bonuses, etc.) of a City of Detroit resident for services rendered or work performed regardless of whether such services or work are performed in or out of the city; and
• All compensation of a nonresident for services rendered or work performed in the City of Detroit where the City of Detroit is the predominant place of employment.

Vacation, holiday, sick, severance and bonus pay to nonresidents who perform part but not all of their work or services in the City of Detroit are taxable in the same ration as their normal activities.

Example: A nonresident employee who is subject to withholding on 60% of their earnings, because 60% of their work is performed in the City of Detroit, is also subject to withholding on 60% of their vacation, holiday, sick pay, severance pay, bonus pay or wage payments during periods of sickness.

Withholding does not apply to:

• Wages paid to domestic help;
• Fees paid to independent contractors who are not employees;
• Payment to a nonresident employee for work or services performed in the City of Detroit, if the predominant place of employment is not the City of Detroit;
• Payment to a nonresident employee for work or services rendered outside of Detroit;
• Pensions and annuities, worker's compensation and similar benefits;
• Amount paid for sickness, personal injury or disability to the same extent that these amounts are exempt from federal income tax, but the employer must withhold from such payments if federal tax is withheld.
• Amounts paid to an employee as reimbursement for expenses incurred in performing services.