Self-Employment Tax in Michigan (2026)
Federal Self-Employment Tax (Applies to All States Including MI)
The federal self-employment tax is 15.3% on the first $168,600 of net SE income (2024), composed of 12.4% Social Security and 2.9% Medicare. Above $168,600, the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies to SE income over $200,000 (single) or $250,000 (married joint).
Self-employed individuals can deduct half of their SE tax (7.65%) from gross income before calculating federal and state income tax.
Michigan State Income Tax on Self-Employment Income
Self-employed Michigan residents pay the flat 4.05% rate plus any applicable city income tax. Detroit self-employed residents face a 2.4% city tax on top of the state rate. Michigan has a flow-through entity (FTE) tax that can provide a federal SALT workaround.
In Michigan, net self-employment income is taxed as ordinary income at up to 4.05% flat (flat rate system).
Quarterly Estimated Tax Payments for Michigan Self-Employed
Self-employed Michigan residents typically must make quarterly estimated tax payments to both the IRS (due Apr 15, Jun 15, Sep 15, Jan 15) and the Michigan Department of Revenue. Underpayment can trigger penalties.
Deductions Available to Michigan Self-Employed
- Half of federal SE tax (7.65%) — deductible above-the-line on federal return
- Home office deduction (if qualifying dedicated workspace)
- Health insurance premiums (100% deductible for self-employed if not eligible for employer plan)
- SEP-IRA or Solo 401(k) contributions — up to 25% of net SE income
- Business expenses: equipment, software, vehicle mileage (67 cents/mile in 2024), professional fees
Frequently Asked Questions
What taxes do self-employed people pay in Michigan?
Self-employed Michigan residents pay: (1) federal self-employment tax of 15.3% on net SE income up to $168,600; (2) federal income tax on net earnings; and (3) Michigan state income tax at up to 4.05% flat. Self-employed Michigan residents pay the flat 4.05% rate plus any applicable city income tax. Detroit self-employed residents face a 2.4% city tax on top of the state rate. Michigan has a flow-through entity (FTE) tax that can provide a federal SALT workaround.
What is the self-employment tax rate in 2026?
The federal SE tax rate is 15.3% on the first $168,600 of net self-employment income (2024). Above that, only the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies above $200,000 (single). This applies to all self-employed individuals regardless of state, including Michigan.
Can I deduct the self-employment tax in Michigan?
Yes. Half of your federal SE tax (7.65%) is deductible as an above-the-line deduction on your federal return, reducing your federal and state taxable income. In Michigan, this deduction also reduces your state taxable income, saving you up to 4.05% flat of the deducted amount.
Do I need to make quarterly estimated tax payments in Michigan?
Yes, if you expect to owe more than $1,000 in federal taxes for the year. Michigan also requires estimated payments if state tax owed exceeds $500. Payment due dates are typically April 15, June 15, September 15, and January 15.