How is crypto taxed in Michigan?

Michigan crypto tax works through the regular state income tax. Michigan has no crypto-specific rules, so gains from selling, swapping or spending crypto, and crypto received as pay or rewards, are taxed at the same flat rate as wages. The federal treatment of crypto as property is explained in how crypto is taxed in the US.

Does Michigan tax crypto gains?

Yes. Michigan's 2025 Taxpayer Assistance Manual tells filers to enter the adjusted gross income from their federal Form 1040 as the starting point of the MI-1040. Because the IRS counts crypto disposals and crypto income in that figure, the amounts carry over automatically.

The IRS lists what counts. Trading one coin for another, cashing out to dollars and paying for goods with crypto are disposals. Mining, staking and payment for services are income. Buying with dollars and holding is not taxable, and neither is moving coins between your own wallets unless a fee is paid in crypto.

Michigan makes some capital gain adjustments of its own on Form MI-1040D, none of them specific to crypto. Seniors born before 1946 can also claim a deduction for interest, dividends and capital gains, set at $14,688 for single filers for 2025.

What is the Michigan income tax rate on cryptocurrency?

It is the flat individual rate. On April 15, 2026, the Treasury said the rate for the 2026 tax year stays at 4.25%. A 2015 law cuts the rate when general fund revenue grows faster than inflation, but in fiscal 2025 revenue fell 1.56% while inflation was 2.70%, so no cut applied. A 2024 appeals court decision found that any such cut lasts only one year.

Michigan has no separate capital gains rate. A gain on coins held for five years is taxed at the same 4.25% as a short-term trade. The personal exemption was $5,800 per person for 2025.

Does Michigan city income tax apply to crypto?

It can. Grand Rapids lists 24 Michigan cities that levy an income tax. Most charge residents 1% and nonresidents 0.5%. Grand Rapids charges 1.5%, Highland Park 2% and Detroit 2.4% for residents.

Detroit's part-year return instructions say residents should generally report all gains and losses. Nonresidents are taxed only on gains from real or tangible property located in Detroit, and gains on intangible assets such as stocks and bonds are not taxed for them. The instructions do not mention crypto by name, so check your city's own guidance. Other states' local taxes are compared in do states tax crypto.

Is Michigan changing its crypto laws?

Not its tax rules so far. House Bill 4087, introduced in February 2025, would let the State Treasurer invest up to 10% of certain state funds in crypto as a strategic bitcoin reserve. As of November 2026 it was still in committee after being referred back on March 19, 2026. Federal reporting is unchanged, and brokers now send Form 1099-DA for sales.

Rules differ by state and change often. Check the tax authority or a qualified professional for your own situation.