The following information is new for 2025 Michigan state tax returns:
For tax year 2025, the Michigan income tax rate is 4.25%.
Homestead Property Tax Credit
- Maximum taxable increased to $165,400
- Total household resources limit increased to $71,500
- Phase-out begins when household resources exceed $62,500
- The maximum homestead property tax credit increases to $1,900
NOTE: Qualifying claimants who own or rent Michigan real property may claim a Homestead Property Tax Credit for property taxes levied on their homestead. A homestead includes property adjacent and contiguous to the home of the owner only when that property is unoccupied and not classified as commercial, industrial, residential, or timber-cut over.
Retirement and Pension Expanded Deduction
The recent Lowering MI Costs Plan provides more options for taxpayers when selecting the best taxing situation for their retirement benefits. Individuals born prior to January 1, 1964 may now qualify for a retirement and pension benefits deduction. For more information, see Michigan Retirement and Pension Schedule (Form 4884).
Credit for Organ Donation Expenses.
You may claim a one-time nonrefundable credit for unreimbursed live organ donation expenses incurred
during the tax year or $10,000, whichever is less. For more information, see the instructions for line 20 of the MI-1040.
Penalty and/or Interest Relief Request.
Taxpayers who qualify for a federal extension due to service in a combat zone, or taxpayers who were affected by a declared disaster zone in Michigan with a Treasury notice, may request relief from penalty and/or interest.