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Income Tax Rate Change: Individual Income Tax
How does the 2023 income tax rate change impact me?
When you file your tax year 2023 state income tax return in 2024, you will see the rate adjustment in the form of either a larger refund or less tax owed.
Why is my Michigan withholding the same on my paycheck if the tax rate decreased from 4.25% to 4.05%?
- Businesses responsible for withholding tax are not required to adjust withholding amounts based on the income tax rate change.
- Employees may submit a revised MI-W4 to their employer (pension recipients may submit a revised MI-W4P to their pension administrator) directing them to adjust withholding amounts at any time.
Can I request that my employer or pension administrator correct the withholding to 4.05% if they do not do so voluntarily?
Employees may submit a revised MI-W4 to their employer (pension recipients may submit a revised MI-W4P to their pension administrator) directing them to adjust withholding amounts at any time.
Because withholding tables and/or software have not been updated, how do I calculate estimated income tax payments due?
- You may choose to:
- continue using the published withholding tables/software for estimates at 4.25%.
- manually calculate your estimates using the reduced 2023 income tax rate of 4.05%.
- If withholding amounts are not adjusted, a reduction in tax liability will be realized in 2024, when individual and fiduciary returns are filed for tax year 2023.
- You may choose to:
What happens if I continue estimating my 2023 income tax payments at the 4.25% rate?
When you file your 2023 Michigan income tax return in 2024, you will see the rate adjustment via a larger refund or less tax owed.
How will the state know that I paid my income tax at 4.25% rather than 4.05% for either a portion or the entire 2023 tax year?
When you file the 2023 income tax return, your tax liability will be calculated at 4.05%. You will receive credit for all withholding paid on your behalf and any estimated tax payments you make. If you paid income tax or had withholding done at 4.25% for any portion of tax year 2023, you should expect less tax owed or a larger refund when you file in 2024.