Michigan 2025 tax changes: new credits, tax rollbacks and deadlines

• Employers have until Friday to send out W-2s to employees 
• Residents have until April 15 to file their federal and state taxes
• Some taxpayers may qualify to have their taxes filed for free 

Tax filing season is here. Here’s what you need to know:

When do I have to file my taxes?

The state of Michigan and the Internal Revenue Service began accepting 2024 income tax returns Monday but employers still have until Friday to distribute W-2s to employees. 

Taxpayers can file their taxes electronically or by mail until April 15 at midnight.

Tax relief for residents impacted by severe weather

Individuals and businesses in Kalamazoo, St. Joseph, Branch and Cass counties affected by storms last May can contact the Michigan Department of Treasury by phone or mail to request relief.

Related:

• Michigan taxes to fall for seniors, low-income earners. How much will you save?
• Give an organ, get a $10,000 Michigan tax credit 
• When to file Michigan state taxes and what's new in 2024

Taxpayers in these counties can also request additional time to file their taxes. Penalties and interest will be waived.

‘Retirement Tax’ rollback continues. Who qualifies?

Democrats reversed a 2011 “retirement tax” law last year so that Michigan will eventually exempt most forms of retirement income from the state’s personal income tax. The administration said the four-year phase-out, which began last year, could save roughly 500,000 Michiganders an average of $1,000.

The state determines how much of a person’s retirement income is exempt using a formula based on the taxpayer’s date of birth. Visit this website for additional information. 

Changes to the Homestead Property Tax credit

The Homestead Property Tax Credit is a credit for Michigan homeowners and renters to pay some of the property taxes that they are billed.

Previously, taxpayers who had “total household resources” of $67,300 and homes with a taxable value of $154,400 would qualify for a credit up to $1,700. 

Now, taxpayers with total household resources of $69,700 or less and a home with a taxable value under $160,700 qualify for this tax credit.  For the 2024 tax year, the maximum Homestead Property Tax allowed is $1,800.

Can I file my taxes for free? 

In addition to the IRS free file forms online, There are several services for residents who are looking to file their taxes for free. In most cases, individuals have to have an adjusted gross income of $32,000 or less, qualify for the Earned Income Tax Credit or be on active military duty.

What if I need an extension? 

Taxpayers who need additional time to file can submit a form to request an extension for state or federal taxes, which grants an individual an additional six months to file. If an individual needs an extension they must apply for one by April 15 and will have until Oct.15. 

Any estimated taxes owed must still be paid by April 15 or the taxpayer risks penalties such as interest on the unpaid taxes. The IRS also offers payment plans for owed taxes.

I’m expecting a refund. When will I get it? 

People who file their taxes electronically may receive their refund two weeks after the state confirms their tax return was received, according to the Michigan Department of Treasury. 

Individuals who file a paper return can expect their refund within six weeks of receiving confirmation from the state.

What’s on the horizon for 2025? 

Last year a Michigan law went into effect that allows live organ donors to claim a one-time $10,000 tax credit to cover costs associated with the procedure. Eligible taxpayers can begin claiming the credit in the 2025 tax year.

The credit is for costs such as child care, transportation, lodging and lost wages.