The Tax Brief real effective rates for 111+ countries — bi-weekly, free.
HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Pennsylvania VS COUNTRY B Michigan

Side-by-side analysis of income tax, effective rates, and take-home pay for Pennsylvania and Michigan in 2026.

Daniel · CountryTaxCalc Updated August 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
Pennsylvania's flat 3.07% state income tax is well below Michigan's flat 4.25%, saving Pennsylvania residents $990/year at $100,000 income and $5,710/year at $500,000. Pennsylvania also has a slight edge on property tax (~1.49% versus Michigan's ~1.48% — essentially a wash) and a much stronger retirement-income exemption, fully exempting Social Security, pensions, and 401(k)/IRA withdrawals at any age, while Michigan only fully exempts Social Security and military retirement, taxing private pensions and 401(k)/IRA withdrawals at 4.25%. Both states have a major city local tax to watch: Philadelphia adds 3.79% for residents, while Detroit adds 2.4% for residents (1.2% for non-resident commuters). Michigan's advantage is its auto-industry job cluster — Ford, GM, and Stellantis headquarters are concentrated in metro Detroit, often paying salaries high enough to offset the state's higher tax rate for engineers and auto-sector professionals.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🔔
COUNTRY A
Pennsylvania
TAX RATE
3.07%
Flat Tax
Flat 3.07% state rate on all income; Philadelphia residents add 3.79% city wage tax
🚗
COUNTRY B
Michigan
TAX RATE
4.25%
Flat Tax
Flat 4.25% state rate on all income; Detroit residents add 2.4% city income tax
TYPICAL ANNUAL DIFFERENCE
Moving from Michigan → Pennsylvania at $100,000
$990
That's $83/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS INCOME
🔔 PA TAX
🚗 MI TAX
SAVINGS
10-YEAR
$50,000
$1,041
$1,441
$400
$4,000
$75,000
$1,808
$2,503
$695
$6,950
$100,000
$2,576
$3,566
$990
$9,900
$150,000
$4,111
$5,691
$1,580
$15,800
$250,000
$7,181
$9,941
$2,760
$27,600
$500,000
$14,856
$20,566
$5,710
$57,100
💡

CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. This helps us provide free tax calculators and comparison tools. Learn more about our affiliate partnerships

Talk to a Real CPA

Taxhub

★ 4.8 verified reviews  ·  3,758 reviews

Moving between states means a complex multi-state tax return. Taxhub matches you with a real CPA via video call — average cost $325. Rated 4.8★ by 3,700+ clients.

⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.

Get Matched With a CPA →

Interested in reaching this audience? Advertise on CountryTaxCalc →

🔔

Pennsylvania Pros & Cons

+ PROS
  • Flat 3.07% state income tax beats Michigan's 4.25% at every income level — saving $400 to $5,710/year
  • Full retirement-income exemption: Social Security, pensions, and 401(k)/IRA withdrawals are all tax-free at the state level, at any age
  • Slightly lower average property tax than Michigan (~1.49% vs ~1.48% — essentially comparable) and no franchise-style surtax
  • Access to Philadelphia (finance, healthcare, pharma) and Pittsburgh (robotics, healthcare, Carnegie Mellon) without Rust Belt-level economic volatility
− CONS
  • Philadelphia residents pay an additional 3.79% city wage tax, pushing their combined rate to 6.86% — higher than Detroit's combined 6.65%
  • Pennsylvania levies an inheritance tax on transfers to non-spouse heirs (4.5%–15%) — Michigan has none
  • Fewer concentrated high-paying industry clusters than Michigan's auto-sector hub in metro Detroit
  • Slower population growth than Michigan's recovering auto and EV-transition economy in recent years
🚗

Michigan Pros & Cons

+ PROS
  • Home to the U.S. auto industry's HQ cluster (Ford, GM, Stellantis) — high-paying engineering and corporate jobs concentrated in metro Detroit, often outweighing the tax gap
  • Full exemption for Social Security and military retirement pay, plus partial exemptions for many public pensions
  • Affordable housing — Michigan's median home price (~$201,000) is well below Pennsylvania's major metro averages
  • No inheritance or estate tax on transfers to any heirs
− CONS
  • Higher state income tax rate (4.25% flat) than Pennsylvania (3.07%) — costs $400 to $5,710/year more depending on income
  • Detroit residents pay an additional 2.4% city income tax (1.2% for non-resident commuters), on top of the 4.25% state rate
  • Private pensions, 401(k), and IRA withdrawals are fully taxable at 4.25% — Pennsylvania exempts all of these entirely
  • Harsh winters (average January temperature around 24°F) and an economy still tied to auto-industry cyclicality and EV-transition uncertainty
FAQ

Frequently Asked Questions

Is Pennsylvania or Michigan cheaper for state income tax?

Pennsylvania is cheaper at every income level. At $100,000, Pennsylvania's flat 3.07% costs $2,576 versus Michigan's flat 4.25% at $3,566 — a $990/year difference. At $500,000, the gap grows to $5,710/year. Michigan's rate has been stable at 4.25% for years, so this gap isn't expected to close.

Which state has lower property tax, Pennsylvania or Michigan?

They're nearly identical: Pennsylvania's average effective property tax rate is about 1.49%, and Michigan's is about 1.48%. On a $400,000 home, that's roughly $5,960/year in Pennsylvania versus $5,920/year in Michigan — a negligible $40/year difference. Property tax isn't a meaningful tiebreaker between these two states.

Does Detroit's city tax change the comparison?

Somewhat, but Pennsylvania still tends to come out ahead. Detroit residents pay a 2.4% city income tax on top of the 4.25% state rate — combined 6.65% (about $5,966 at $100,000). Philadelphia residents pay 3.79% on top of 3.07% — combined 6.86% (about $6,366 at $100,000). Detroit's combined rate is actually slightly lower than Philadelphia's, but both cities erode most or all of their state's income-tax advantage.

Does either state tax retirement income like 401(k) and IRA withdrawals?

Pennsylvania fully exempts Social Security, pensions, and 401(k)/IRA withdrawals from state tax at any age. Michigan fully exempts Social Security and military retirement, and gives partial exemptions for many public pensions based on age and retirement year, but private pensions, 401(k), and IRA withdrawals are fully taxable at 4.25%. Pennsylvania is meaningfully more retirement-friendly overall.

Should I stay in Michigan for auto-industry jobs or move to Pennsylvania for lower taxes?

If you work directly for Ford, GM, Stellantis, or a Tier 1-3 supplier concentrated in metro Detroit or Flint, salaries are often 20-30% higher than comparable roles elsewhere — likely outweighing Michigan's $990-$5,710/year higher tax bill. If you can work remotely or your role isn't auto-industry-specific, Pennsylvania's lower flat tax and comparable property tax make it the better financial choice.

How much would I save moving from Michigan to Pennsylvania?

At $100,000 income, moving from Michigan to Pennsylvania could save about $990/year in state income tax, with property tax being roughly a wash between the two states. At $250,000 income, savings grow to about $2,760/year. Moving away from Detroit specifically also eliminates Detroit's 2.4% city income tax.

Does Pennsylvania or Michigan have an inheritance or estate tax?

Pennsylvania levies an inheritance tax on transfers to non-spouse heirs: 4.5% for children and grandchildren, 12% for siblings, and 15% for other beneficiaries. Michigan has no estate or inheritance tax at all. This is worth factoring into estate planning, especially for Pennsylvania residents leaving assets to non-spouse relatives.

Which state has better weather and quality of life?

Both states have cold winters, but Michigan's are generally more severe (average January temperature around 24°F versus Pennsylvania's mid-to-upper 20s). Pennsylvania offers more temperate coastal-adjacent climate near Philadelphia. Michigan offers Great Lakes recreation (boating, fishing, beaches) that Pennsylvania doesn't match. Both have strong universities and healthcare systems.
From the brief
NL27%new 2027 rate, down from 30%
DK65.4kkr/mo threshold, cut from 78k
MT1940snon-dom regime unchanged since
The Tax Brief · Subscribe free

More like this, every two weeks.

Verified rates, real after-tax figures, plain English. Free.

Bi-weekly. No spam. Unsubscribe in one click.