East Lansing's Income Tax Is Michigan's Newest, and a College Town Talked Itself Into It

Most of Michigan’s city income taxes are old news. Walker started its version in 1988, and nothing new came along for three decades. Then two towns broke the drought back to back: Benton Harbor in 2018, East Lansing a year later. That makes East Lansing’s tax the newest one in the state, live since January 1, 2019.

The interesting part is how a college town argued its way there. This was not a quiet council vote. Voters said yes in August 2018, by about 58 percent, and they got a trade for it. The city capped its operating property millage lower — from 20 mills down to 13 in years the income tax runs — so homeowners saw a rollback on their July 2019 bills. Higher property taxes on residents, swapped for a thinner tax that also reaches people who only work in town.

That reach is the whole point in a place built around Michigan State University. A resident pays 1 percent. Someone who lives in Okemos or Haslett but earns a paycheck inside city limits pays 0.5 percent — the nonresident rate. So a student waiting tables near campus, or a staffer commuting in, leaves a little behind even without a city address. It is the standard split the 1964 Uniform City Income Tax Act allows; only Detroit and Highland Park charge more.

The pitch was pensions. Of the money raised, 60 percent goes to unfunded pension obligations, 20 percent to police and fire, 20 percent to infrastructure. And the whole thing carries a sunset: the ordinance winds down after 12 years, which puts its expiration around 2031 unless the city renews it.

Live in East Lansing but work in Lansing, which taxes you too? A reciprocal credit keeps the same wages from being fully hit twice. The particulars of your own paycheck are the kind of thing a preparer or the city’s income tax office on Abbot Road can sort better than a short note can. But the shape is unusual, and it is worth knowing that this young tax came with a property-tax rollback baked in.