No Tax on Tips Calculator for Michigan (2026)
Calculate how much Michigan workers save now that tips are exempt from federal income tax under the OBBBA.
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Your Annual Tax Savings in Michigan
Tips Tax Exemption in Michigan
Under the One Big Beautiful Bill Act (OBBBA), workers in Michigan who earn tips can deduct 100% of their tip income from federal income tax for tax years 2025 through 2028.
Michigan Minimum Wage for Tipped Workers
The minimum wage in Michigan is $10.56/hour. Tipped workers may be paid a lower base wage of $4.01/hour, with tips expected to make up the difference. This makes the federal tip tax exemption especially valuable for Michigan workers.
Top Tipped Industries in Michigan
- Restaurant servers
- Bartenders
- Hotel staff
- Casino dealers
Does Michigan Tax Tips? (State Conformity)
Michigan has no state income tax, so combined with the federal tip tax exemption, tipped workers in Michigan pay no income tax at all on their tips. Only FICA taxes (Social Security and Medicare) still apply.
How the No Tax on Tips Law Works
What Qualifies
- Cash tips received directly from customers
- Credit/debit card tips
- Tips from tip pools or tip sharing
- Service charges distributed as tips
What Doesn't Change
- FICA taxes still apply: You still pay 6.2% Social Security + 1.45% Medicare on tip income
- Tips must still be reported: Report all tips to your employer and on your tax return
- Annual cap: Deduction limited to $25,000 per year in tip income
- Income limit: The exemption applies to workers earning less than $150,000/year (single) or $300,000 (married filing jointly)
Federal Calculators
Compare with the federal-level tools: Tip Tax Savings (Federal) | Overtime Tax Savings (Federal)