How does Michigan tax capital gains?

Michigan does not give capital gains a special rate. They are taxed as ordinary income at the flat 4.25% state rate, the same as wages. There is no distinction between short-term and long-term gains for Michigan state tax.

What are the federal capital gains rates?

Short-term gains (assets held one year or less) are taxed at your ordinary federal income-tax rate. Long-term gains (held more than one year) are taxed at 0%, 15%, or 20% depending on your taxable income and filing status.

What income triggers the 15% and 20% federal rates?

For 2024, single filers pay 0% on long-term gains up to about 47,025 dollars of taxable income, 15% up to about 518,900 dollars, and 20% above that. Married-filing-jointly thresholds are roughly double the single amounts.

Is there a net investment income tax?

Yes, a federal 3.8% net investment income tax can apply on top of the capital gains rate for high earners (above 200,000 dollars single, 250,000 dollars married). This calculator does not model that surtax.

How accurate is this estimate?

It accurately applies Michigan's flat rate and the federal long-term brackets you select. Short-term gains are estimated using an ordinary marginal rate you enter, since your exact federal bracket depends on your full return.

Michigan Capital Gains Tax Calculator

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When you sell an investment at a profit in Michigan, you face two layers of tax. The federal rate depends on how long you held the asset and your income; Michigan simply taxes the gain as ordinary income at its flat 4.25%. This calculator combines both so you can see your total bill before you sell.

How it works

The two layers are computed independently and added:

Pick the holding period. Long-term means held more than one year and gets the preferential federal rate; short-term is taxed at your ordinary federal rate.
Find the federal rate. For long-term gains the calculator uses the 0% / 15% / 20% brackets based on your taxable income and filing status. For short-term it uses the ordinary marginal rate you enter.
Add Michigan. Michigan applies its flat 4.25% to the full gain regardless of holding period.

So totalTax = gain × federalRate + gain × 0.0425.

Tips and example

Suppose you have a $20,000 long-term gain, you file single, and your taxable income places you in the 15% federal bracket. Federal tax is $20,000 × 15% = $3,000; Michigan tax is $20,000 × 4.25% = $850. Your total capital gains tax is $3,850, an effective rate of about 19.25% on the gain.

Holding an asset for more than a year can cut the federal rate sharply — often from your ordinary rate down to 15% — while Michigan’s rate stays flat either way. This calculator does not model the 3.8% net investment income surtax that can apply to high earners.