Michigan Mileage Deduction 2026: Flat 4.05% State Tax

Michigan has a flat income tax of 4.05%. Your Schedule C mileage deduction reduces both federal and state taxes. No brackets to calculate, every deductible dollar saves 4.05 cents at the state level.

Deduction Savings

At 15,000 business miles: $10,875 deduction saves roughly $440 in state taxes plus $4,056 federal. Total: about $4,496.

How to File

Deduct on federal Schedule C, Line 9 at 72.5¢/mile. Michigan starts with your federal adjusted gross income, so the deduction flows through to your state return. Note: a few Michigan cities (Detroit at 2.4%, Grand Rapids at 1.5%) levy their own income tax. If you live or work in one, your mileage deduction may reduce that city tax as well. Keep a mileage log with the date, destination, purpose, and miles for each trip.

Employer Reimbursement

Michigan does not require private employers to reimburse mileage.

FAQ

Do Michigan cities have local income taxes?

A few Michigan cities levy their own income tax (Detroit at 2.4% for residents, Grand Rapids at 1.5%). If you are self-employed in one of these cities, your mileage deduction may reduce the city tax as well. Check with your city's tax office.

Does my mileage deduction reduce Michigan state taxes?

Yes. Michigan uses your federal AGI as the starting point. Your Schedule C mileage deduction reduces that number, which directly reduces your state tax at the flat 4.05% rate.

Can W-2 employees deduct mileage in Michigan?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. Michigan does not require employer reimbursement, so if your employer does not reimburse, you have no tax remedy.

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