Michigan no tax on tips calculator for 2026–2028
Michigan picked up the tips deduction for 2026, 2027 and 2028 under 2025 PA 24 — but not for 2025 — and its tipped wage climbs as a share of the minimum every year until 2031.
What 2025 PA 24 allows
Governor Whitmer signed Public Act 24 on October 7, 2025. Treasury’s January 2026 notice says it borrows the federal definitions of qualified tips and qualified overtime, so the Michigan deduction “should generally mirror” the federal one. Residents deduct everything they deducted federally; nonresidents only tips attributable to work performed in Michigan. The flat rate under MCL 206.51 is 4.25%, subject to the statute’s revenue-trigger reduction. City income taxes, such as Detroit’s, follow their own rules.
Michigan figures
| Cash wage / minimum | $5.49 / $13.73 |
|---|---|
| In force | July 1, 2026 – December 31, 2026 |
| Next change | January 1, 2027: $6.30 / $15.00 |
| Tipped threshold | Not specified |
| Tips on the 2025 return | tips stay taxable in this state. “For the 2025 tax year, deductions for qualifying overtime compensation and qualified tips will not be available in Michigan.” Source: Michigan Department of Treasury |
| Tips on the 2026 return | state allows the federal tips amount. 2025 PA 24 lets residents deduct all qualified tips deducted on the federal return for 2026, 2027 and 2028. Source: Michigan Department of Treasury |
Senate Bill 8 and the tipped percentage
Since February 21, 2025 Michigan’s tipped wage has been a rising share of the minimum: 38% at first, 40% in 2026 ($5.49 of $13.73) and 42% from January 1, 2027, when the minimum reaches $15.00 and the tipped wage $6.30. The share keeps rising two points a year to 50% in 2031.
A Grand Rapids server, 2026 return
The federal deduction is $19,000 ($2,270 saved) and Michigan subtracts the same amount, about $808 at 4.25%. In a 30-hour week at $5.49 an hour the employer pays $165; with $130 of tips it owes $117 more to reach $412.
Check a Michigan workweek (2027 rates from January 1)
Where these figures come from
- Michigan Department of Treasury · Michigan Department of Labor and Economic Opportunity, Wage and Hour
- New Deductions for Qualified Overtime Compensation and Qualified Tips (2025 PA 24) (2026-01-06)
- MCL 206.51 (2026)
- Minimum Wages for Tipped Employees (table by state) (2026-07-01)
- Minimum wage schedule poster (WHD-9904) and Minimum Wage & Overtime page (2025-02-21)
Federal rules: how the deduction works. Nearby: Ohio, Indiana, Wisconsin.
Figures verified against primary sources on