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The Michigan Department of Treasury (Department) confirmed in frequently asked questions that revised withholding tables will not be published to reflect the 2023 reduction in the personal income tax rate from 4.25% to 4.05% that was announced earlier this year.

Treasury takes a neutral position on adjusting withholding amounts based on the income tax rate change. Businesses may choose to continue withholding at 4.25%, per the published withholding tables, or refigure withholding calculations using the reduced 2023 income tax rate of 4.05%.

The 2023 tax year is the first year that a rate reduction is possible under the legislation. Given the statutory formula and the economic factors, Michigan taxpayers will find their income tax rate reduced from 4.25 percent to 4.05 percent when they file their 2023 returns.

The exemption amount is $5,400 per year times the number of personal and dependency exemptions allowed under Part 1 of the Michigan Income Tax Act. An employee may not claim more exemptions on the MI-W4 than can be claimed on the employee's Michigan income tax return.

Michigan has a flat 4.25 percent individual income tax rate. There are also jurisdictions that collect local income taxes. Michigan has a 6.00 percent corporate income tax rate. Michigan has a 6.00 percent state sales tax rate and does not levy any local sales taxes.

Sales, Use and Withholding taxes are filed on a monthly, quarterly or annual basis. A filing frequency will be assigned upon a taxpayer's estimated level of activity. After the first tax year of filing, the frequency is determined by a taxpayer's previous tax liability.