CPA for Detroit, MI Clients: Remote Tax, Payroll and Accounting

We are a Naperville, Illinois CPA firm and we serve Detroit-area clients remotely; we have no office in Michigan. Michigan uses a flat state income tax, and Detroit adds a city income tax that applies both to people who live in the city and to people who only work there. That second tax is the one that surprises suburban commuters and new employers, so this page focuses on how the two layers fit together.

The Michigan flat tax

Michigan imposes one rate on the taxable income of individuals other than corporations. The statute sets 4.25%, and it has a mechanism that can reduce the rate for a tax year when general fund revenue grows faster than inflation under the formula in the law. Confirm the rate in the instructions for the year you are filing. Michigan starts from federal adjusted gross income and adjusts for state rules, so retirement income, college savings, credits and business income each need a look. Our Michigan page covers state rules.

The Detroit city income tax

Detroit's rates for 2013 and later years are 2.4% for resident individuals, 1.2% for nonresident individuals and 2% for corporations, unless the city notifies otherwise. The tax follows where you live and where you work:

• If you live in Detroit, you owe the resident rate on your income.
• If you live in a suburb and work in Detroit, you owe the nonresident rate on your Detroit earnings, and your employer should withhold it.
• If you own a business in Detroit, the business income tax rules and the corporate rate apply.

Example: a Detroit resident with $60,000 of taxable wages would owe about $1,440 in city tax at 2.4%, while a suburban commuter earning the same $60,000 in Detroit would owe about $720 at 1.2%. Michigan's own tax is separate and comes on top.

Filing and withholding

Since tax year 2015, individuals file their Detroit income tax returns with the State of Michigan rather than the city, and the forms can be filed electronically. Since January 2017, the Michigan Department of Treasury has processed Detroit's corporate, partnership and fiduciary (estate and trust) returns and collects and enforces employer withholding. If you are an employer, that means you register and remit Detroit city withholding through the state's process, not the city's office. The city's website still publishes the rates and certain clearance forms. Our payroll services and our guide to local payroll taxes cover those situations, including employees who move in or out of the city.

Detroit and the suburbs

Many Detroit-area households straddle jurisdictions: a suburban resident may work in Detroit, or someone may live in Michigan and work for an out-of-state company. Each combination changes withholding and the credits you can claim, so we review pay stubs, W-2s and work locations. Our state income tax withholding guide explains the basics.

The community

The Detroit-Warren-Dearborn metro area has about 106,000 residents who identify as Asian Indian alone or in combination (roughly 2.4%), and Oakland County has about 56,800 (4.4%). The city of Detroit itself has about 4,500 (0.7%), according to the American Community Survey for 2020 to 2024. We help families with the US-India tax treaty, India account reporting, and tax work for IT consultants and tech professionals.

How we can help

We prepare federal, Michigan and Detroit returns, review whether withholding is correct, and handle payroll and books for Detroit-area businesses, all remotely from Naperville. For a decision about your own taxes, talk with a qualified professional.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.