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State Individual Income Tax Rate for 2026 Tax Year Determined
April 15, 2026
State Treasurer Rachael Eubanks, Senate Fiscal Agency Director Kathryn Summers and House Fiscal Agency Director Mary Ann Cleary today published their statutorily required calculation to determine the individual income tax rate for the 2026 tax year.
Upon publication of the state of Michigan’s Annual Comprehensive Financial Report (ACFR) for Fiscal Year (FY) 2025 – which ran from Oct. 1, 2024, to Sept. 30, 2025 – the state treasurer and agency directors determined that the general fund growth did not exceed inflation and a rate adjustment calculation was not required.
“Each year, following the release of Michigan’s Annual Comprehensive Financial Report, state law requires our agencies to determine whether the individual income tax rate should change,” State Treasurer Rachael Eubanks said. “After completing this year’s analysis, the results show that the conditions for an income tax rate reduction were not met. As a result, the individual income tax rate for the 2026 tax year will remain at 4.25%.”
For the 2026 tax year, the determination is based on the state fiscal year ended Sept. 30, 2025. Based on the data from that period, total general fund revenue decreased by 1.56% and the rate of inflation for the period was 2.70%. These conditions do not require the application of the statutory formula to determine a potential rate reduction. Accordingly, the rate in effect under state law for the 2026 tax year is 4.25%.
The ACFR for FY2025 can be found on the State Budget Office’s website. Additional details about the individual income tax rate calculation can be found in a taxpayer notice issued by the Michigan Department of Treasury.
In 2015, Michigan enacted a law requiring a reduction of the state individual income tax rate if the general fund grew faster than the rate of inflation in any year starting with the 2023 tax year. (A decision by the Court of Appeals in 2024 determined that any reduction triggered by that law is temporary and for one year in duration.) Upon the publication of the annual ACFR each year, the state law requires the state treasurer and the directors of the House and Senate Fiscal Agencies to determine if the income tax rate will change.
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