What Percentage of Tax Is Withheld From a Michigan Paycheck?

Payroll withholding ensures taxes are paid regularly throughout the year. This system helps individuals manage annual tax obligations by deducting estimated amounts from each paycheck, rather than requiring a single large payment at year-end. Understanding these withholdings provides clarity on how gross earnings translate into net take-home pay. It also helps individuals anticipate their tax liability and avoid potential underpayment penalties.

Federal Payroll Withholdings

Federal taxes represent a significant portion of payroll withholdings, encompassing federal income tax, Social Security, and Medicare taxes. These deductions are mandatory for most employees. Employers are responsible for calculating and remitting these amounts to the appropriate federal agencies.

Federal income tax withholding operates on a progressive system, where higher earners generally pay a larger percentage of their income in taxes. The amount withheld from each paycheck estimates an individual’s annual income tax liability, influenced by gross income, filing status, and elections made on Form W-4. This system ensures taxpayers meet their obligations throughout the year, preventing a large tax bill at filing time. The IRS provides withholding tables for employers to use.

Social Security tax, also known as Old-Age, Survivors, and Disability Insurance (OASDI), funds benefits for retirees, disabled individuals, and survivors. For 2025, employees contribute 6.2% of their wages to Social Security. This tax applies only up to an annual wage base limit, which is $176,100 for 2025.

Medicare tax, which supports the nation’s hospital insurance program, is assessed at a rate of 1.45% of all earned wages. Unlike Social Security tax, there is no wage base limit for Medicare tax, meaning all covered earnings are subject to this rate. An additional Medicare tax of 0.9% applies to wages exceeding certain thresholds: $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married individuals filing separately. Employers must withhold this additional tax once an employee’s wages surpass $200,000 within a calendar year.

Michigan State Income Tax Withholding

Michigan imposes a flat-rate state income tax, meaning all taxable income is subject to the same percentage, regardless of the amount earned. For 2025, the individual income tax rate in Michigan is 4.25%. This rate applies to all Michigan residents and non-residents who earn income within the state.

Taxable income for Michigan’s state income tax is generally based on an individual’s federal adjusted gross income (AGI), with specific Michigan additions and subtractions. Taxpayers can reduce their taxable income by claiming personal exemptions. For 2025, the personal exemption amount is $5,800 per taxpayer and for each dependent. Additional exemptions are available for specific circumstances, such as for individuals who are deaf, blind, permanently disabled, or disabled veterans.

Michigan also provides deductions for certain types of retirement and pension income, with rules depending on factors like the taxpayer’s birth year and income source. Michigan is phasing out its tax on retirement income, with full exemption for qualifying benefits expected by the 2026 tax year. For 2025, taxpayers born after 1945 and before 1967 may deduct up to 75% of the maximum private retirement benefit deduction.

Michigan City Income Tax Withholding

Beyond state and federal taxes, individuals in Michigan may also be subject to local city income taxes. Not all Michigan cities levy an income tax, but a significant number do, impacting residents and non-residents who work within those city limits. Major cities with their own income taxes include Detroit, Grand Rapids, Lansing, and Flint.

City income tax rates are flat, similar to the state income tax, but they vary by city. Residents of a taxing city pay a higher rate than non-residents who work in that city. For example, Detroit imposes a 2.4% tax rate for residents and 1.2% for non-residents. Flint’s rates are 1% for residents and 0.5% for non-residents. These taxes are withheld from paychecks for employees working or residing in a city with an income tax.

These city taxes contribute to local government operations and services. City income taxes allow for personal exemptions, similar to state and federal taxes, which can reduce the amount of income subject to the city tax.

Factors Affecting Your Withholding

The actual percentage of taxes withheld from an individual’s paycheck is a dynamic calculation influenced by several personal and financial factors. The most direct influence on federal income tax withholding comes from the information provided on IRS Form W-4. This form allows employees to communicate their tax situation to their employer, including their filing status, whether they hold multiple jobs, and any credits or deductions they anticipate claiming.

The current Form W-4 no longer uses withholding allowances. Instead, it guides employees through steps to account for their filing status, dependents, and other adjustments, such as estimated itemized deductions or additional income. Accurately completing this form helps ensure the correct amount of federal income tax is withheld, preventing a large tax bill or an excessive refund. Employees can adjust their W-4 at any time to reflect changes in their financial or personal circumstances, such as marriage, the birth of a child, or a change in employment.

Pre-tax deductions reduce an individual’s taxable income, lowering the amount of income tax withheld. These deductions are subtracted from gross pay before taxes are calculated. Common examples include contributions to traditional retirement accounts like 401(k)s or 403(b)s, and premiums paid for employer-sponsored health insurance. By reducing the amount of income subject to tax, pre-tax deductions can increase an employee’s net take-home pay.

While not directly affecting the percentage of tax, pay frequency can influence the amount withheld per paycheck. For example, someone paid weekly will have a smaller amount withheld from each check compared to someone paid monthly, even if their annual income and tax liability are the same. This is because the annual tax obligation is spread out over more pay periods. Employers use specific withholding tables that account for different pay frequencies to ensure appropriate amounts are withheld.

Understanding Your Pay Stub

A pay stub serves as a detailed record of an individual’s earnings and deductions for a specific pay period. It itemizes gross pay, the total earnings before any deductions, and net pay, the amount received after all withholdings. Examining a pay stub allows individuals to verify that the correct amounts are being withheld for various taxes and other deductions.

Key sections of a pay stub include detailed breakdowns of mandatory tax withholdings. Individuals can locate separate entries for federal income tax, Social Security tax (OASDI or FICA-SS), and Medicare tax (FICA-Med). The pay stub will also show deductions for Michigan state income tax and, if applicable, any city income tax withholdings. Each of these deductions should be clearly labeled with their respective rates or calculated amounts.

Pay stubs also provide year-to-date (YTD) figures for both earnings and deductions. These cumulative totals allow individuals to track their financial progress and assess how much has been withheld for taxes throughout the year. Regularly reviewing YTD amounts helps in financial planning and can provide an early indication if withholding adjustments are needed. If there are significant life changes, such as marriage, having a child, or obtaining a second job, individuals should consider adjusting their Form W-4 to ensure their withholding remains accurate.