Self-employed taxes and LLC costs in Michigan, 2026
Michigan keeps a flat state income tax, but two dozen of its cities tax residents and local businesses on top of it.
Total tax on this income in 2026
$20,907
Put aside 25% of each payment · $5,227 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| Michigan income tax | $3,107 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 24.6% |
With an S corp election and a $34,000 salary, about $3,689 less tax (check it).
Computed by Radif Partners from IRS and Michigan agency documents read on October 15, 2026 · How we calculate
Michigan's flat income tax stays at 4.25 % for 2026, after the automatic rate-cut trigger was not met, and it applies to federal AGI less a personal exemption of $5,900 ($11,800 for a married couple filing jointly). A single freelancer with $75,000 of profit pays $2,712 to the state and $18,206 in all with federal income tax and self-employment tax. Where you live can add a city income tax: 24 Michigan cities levy one, Detroit at 2.4 % for residents, Grand Rapids at 1.5 %, most others at 1%, and nonresidents who do business in those cities pay half the resident rate on the profit earned there. An LLC is cheap to run, $50 to form and $25 for the annual statement due February 15, or $175 over five years. S corporations are flow-through entities in Michigan, and the election saves $5,198 in our model at $120,000 of profit.
Michigan at a glance, 2026
| LLC filing fee | $50 |
| Annual Statement | $25 a year |
| Income tax | flat 4.25 % |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $18,206 in all, $2,712 to Michigan |
Michigan is one of a handful of states where a city can tax a self-employed person's net profit directly. Twenty-four cities have adopted an income tax, most of them under the Uniform City Income Tax Ordinance at 1% for residents and 0.5% for nonresidents, and the tax reaches the net profits of a business located in the city as well as wages (City of Grand Rapids, Michigan cities with an income tax). Detroit sits well above the rest at 2.4 % for residents and 1.2% for nonresidents, with $600 per personal exemption, and the state Treasury administers it (Michigan Treasury, Detroit withholding 2026).
Local tax on business profit
Detroit City of Detroit income tax (administered by Michigan Treasury)
$1,920
| Rate | 2.4% |
A Detroit freelancer's two layers
On $75,000 of profit, the Detroit resident rate works out to roughly $1,800 before the exemption, on top of the $2,712 state tax. Lansing, Flint, Pontiac and the other 1% cities take about $750 on the same profit. The calculator at the top of the page leaves city tax out, since it depends on your address; the Detroit page works through the city calculation, and the local business taxes guide compares Michigan's cities with those of other states. A Detroit resident who works from home for clients in other cities still owes the full resident rate, since residence and not client location decides it. Someone living in a suburb without a city tax who rents an office in Detroit owes the nonresident rate on the profit earned there.
Why the state rate did not fall
Michigan law cuts the individual rate for a year when general fund revenue growth beats inflation by enough. Treasury announced in April 2026 that the condition was not met, so 2026 income is taxed at 4.25 % (Michigan Treasury, 2026 rate determination). The personal exemption rises to $5,900 per person (Michigan withholding guide 2026). With no standard deduction and no brackets, $120,000 of profit leads to $4,489 of state tax for a single filer.
Keeping the LLC in good standing
Articles of Organization on Form CSCL/CD-700 cost $50 (LARA Form 700). The $25 annual statement is due each February 15, starting the year after formation; an LLC formed after September 30 skips the first February 15. If the LLC elects S status, Michigan treats it as a flow-through entity rather than taxing it under the corporate income tax, and the model at $120,000 of profit and a $50,000 salary shows $5,198 of saving after $2,000 of costs. The LLC vs S corp calculator runs other salaries.
City and county taxes on business income in Michigan
| Place | Tax | Rate | Who pays |
|---|---|---|---|
| Detroit | City of Detroit income tax (administered by Michigan Treasury) | 2.4% | $600 per personal exemption |
| Grand Rapids | City income tax | 1.5% | $600 per exemption |
| Highland Park | City income tax | 2% | $600 per exemption |
| Saginaw | City income tax | varies | residents and nonresidents |
| Albion, Battle Creek, Benton Harbor, Big Rapids, East Lansing, Flint, Grayling, Hamtramck, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Springfield, Walker | City income tax (Uniform City Income Tax Ordinance rates) | 1% | per-exemption amount $600 in most cities; Battle Creek, Springfield, Benton Harbor $750; Ionia $700; Hudson, Portland $1,000; Grayling $3,000 (Grand Rapids table) |