Muskegon Heights and Its Foundry-Town Income Tax

Muskegon Heights was drawn up as a factory town before many people even lived there. In the early 1890s the Muskegon Improvement Company laid out the town and set aside land for factory sites before the workers arrived. Foundries and engine shops followed, and the payroll came with them. That industrial base is the reason the city can lean on a tax most Michigan cities never touch.

Only about two dozen Michigan cities charge their own income tax, and just two sit in Muskegon County: the city of Muskegon and Muskegon Heights, right next door. Live in Muskegon Heights and you pay 1% of what you earn to the city. Work here but live somewhere else, and you pay half that — 0.5% — on the wages you make inside the city line.

The rate is capped by state law. A 1964 act lets most Michigan cities go no higher than 1% on residents and 0.5% on everyone else who works there. Detroit and a few others sit in a higher tier, but Muskegon Heights holds to the common line, same as its neighbor across the border.

That neighbor matters at tax time. A resident who works over in Muskegon usually gets credit for part of the tax paid there, so the same paycheck isn’t fully taxed by both towns. It cuts the other way too, which is why the paired cities are worth knowing about if you live on one side and clock in on the other.

This is its own return, separate from your state filing. Your employer may already pull the tax from each check, but you still square up with the city once a year. The Income Tax Division sits at City Hall on Peck Street, and a preparer or the city office can sort out how your own situation lands.