The Michigan bonus tax calculator at the top of this page helps employers quickly estimate employee take-home pay (also known as net pay) for bonuses, using the state’s flat individual income tax rate.
Behind the numbers
Behind the numbers
Updated: July 12, 2025
Does Michigan tax bonuses?
Yes. Michigan applies a flat income tax rate of 4.25% to all taxable wages, including bonuses. Keep in mind this includes supplemental wages such as vacation pay, commissions, and overtime. Employers may follow federal guidelines for computing tax or simply apply the flat 4.25% withholding rate.
How to calculate bonus tax in Michigan
Use the flat 4.25% withholding rate for state taxes on all bonus payments.
How can employers in Michigan pay bonuses to employees?
Bonuses in Michigan can be paid via:
- Check
- Direct deposit
- Pay card
How do bonuses work in Michigan?
Bonuses are processed the same as wages for payroll and reporting purposes. Use Form W-2 at year-end.
Why are bonuses taxed differently than standard pay?
They aren’t — the same flat rate applies to all income types.