Hamtramck local tax guide
Who pays Hamtramck's local tax
If you live in Hamtramck, the 1% rate applies to all of your wages, wherever you earn them. Because most of the city's border is with Detroit, many residents work across the line, where Detroit withholds its 1.2% nonresident tax. Hamtramck then credits that Detroit tax, but only up to the 0.5% a nonresident would owe Hamtramck, so a resident who works in Detroit still owes Hamtramck $375 at a $75,000 salary. People who live elsewhere and work in Hamtramck owe 0.5% only on pay for days worked inside the city.
A 1% city inside a 2.4% city
Hamtramck is a city of about 28,400 people in Wayne County, almost entirely surrounded by Detroit, with Highland Park just to its west. It has taxed income since 1962, the same year as Detroit, and it runs its own income tax office rather than going through Michigan Treasury.
Its rates follow the default in Michigan's uniform city income tax ordinance: 1% on residents and half that on nonresidents. Detroit, a few blocks away in every direction, charges 2.4% and 1.2%. For a household choosing between the two, that difference is the main local tax consideration.
The city's return allows a personal exemption for each person you claim. Our estimate applies the rate to gross pay without it, so the true bill is a little lower.
What Hamtramck's tax costs at $75,000
A single filer earning $75,000 owes $7,670 in federal income tax, $2,937 in Michigan tax at the flat 4.25% rate, plus $4,650 for Social Security and $1,088 for Medicare. Living and working in Hamtramck adds $750, leaving $57,905 a year, or $4,825 a month.
Against a town with no city income tax, where the same worker keeps $58,655, a Hamtramck resident gives up $750. A Detroit resident at the same salary pays $1,800 to Detroit, so living in Hamtramck instead of Detroit saves $1,050 a year if you also work in your home city.
The comparison changes if you work in Detroit. You would then pay Detroit's 1.2% as a nonresident plus the $375 Hamtramck keeps after its credit, which still totals less than a Detroit resident pays.
Withholding and filing in Hamtramck
Employers located in Hamtramck withhold the city tax from paychecks after you complete a city withholding certificate stating where you live. If your employer is in Detroit, payroll will usually withhold only Detroit's nonresident tax, leaving your Hamtramck balance to be paid when you file or through estimated payments.
You file a Hamtramck return with the city's income tax department, separate from your Michigan MI-1040. Residents list tax paid to Detroit or another Michigan city to claim the credit.
Tips for Hamtramck paychecks
Plan for the leftover balance if you work in Detroit
Detroit withholding does not cover the $375 Hamtramck keeps after its credit on a $75,000 salary. Ask your employer whether it can also withhold Hamtramck tax, or set money aside for April.
Confirm which side of the line you live on
Streets near the Hamtramck and Detroit border can look identical. Check your property record before filling out a withholding certificate, since one side carries a 2.4% resident rate and the other 1%.
Keep your Detroit W-2 handy
The Hamtramck credit depends on how much Detroit tax was actually withheld, so attach or list your Detroit withholding when you file the city return.