Tax Planning for Physicians in Michigan (2026)

Physicians in Michigan face a top rate of 4.25% on top of the 37% federal bracket and payroll taxes. This guide summarizes the 2026 Michigan rules that matter most to doctors, dentists and practice owners.

Michigan income tax rates for 2026

Michigan has a flat income tax of 4.25% for 2026.

Pass-through entity tax (SALT workaround)

Yes. The state has an elective pass-through entity tax (PTET) that partnerships and S corporations can use to deduct state income tax at the entity level.

For physician practice owners, the PTET matters more in 2026 because the federal SALT deduction for individuals phases back down toward $10,000 once modified AGI passes $505,000. Read our guide to the pass-through entity tax for physicians.

Local income taxes

Two dozen Michigan cities levy income taxes; Detroit charges 2.4% for residents and 1.2% for nonresidents who work in the city.

Planning notes for Michigan physicians

• Michigan's flat rate is 4.25%, but Detroit, Grand Rapids, Lansing and other cities add their own income tax.
• Physicians who live outside Detroit but work at Detroit hospitals pay the 1.2% nonresident rate on wages earned in the city.

Federal strategies that apply in every state

State tax is only part of the picture. The federal rules drive most of the savings for physicians in Michigan:

• W-2 physician tax strategies: maximize 401(k)/403(b), 457(b), HSA and the backdoor Roth.
• 1099 physician tax planning: solo 401(k), deductions and the S corporation decision.
• Practice owners: entity, compensation, cash balance plans and exit planning.
• Real estate and cost segregation for physicians with time to participate.

City guides for Michigan physicians

Local taxes and planning notes for physicians in Detroit, Grand Rapids, Ann Arbor, Lansing. Our planning is delivered virtually, so location does not limit access.

Guides by specialty

Surgeons · Anesthesiologists · Radiologists · Orthopedic Surgeons · Cardiologists · Dentists · Dermatologists · Emergency Physicians · Gastroenterologists · Ophthalmologists · Neurosurgeons · Plastic Surgeons · Psychiatrists · Hospitalists · Pain Management Physicians

This article is for general educational purposes and is not tax, legal or investment advice. Tax law changes often and its application depends on your facts. Figures reflect 2026 rules as published by the sources listed above. Consult a qualified professional before acting. See our editorial policy.