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The United States has several different sets of tax laws. Federal tax law applies to taxes paid to the United States in Washington, D.C. State tax laws apply to taxes paid to the state in which you live. In some places (but not in Ann Arbor), there are also local or city taxes. It is important to comply with all federal, state, and local tax laws that apply to you.

The federal tax system is a graduated tax system, which means that the percentage of tax one pays is dependent on the amount of income one earns. If you earn a small income, you pay a smaller percentage in tax, but if you earn a larger salary, you pay a higher percentage. The Michigan State tax is a fixed percentage, that is, all Michigan State residents who pay taxes pay the same percentage.

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