DETROIT (Michigan News Source) – Four years after the start of the pandemic, the city of Detroit is recovering and evidence is its boost in the city income tax it collects.

The city of Detroit enacted the state’s first local income tax in 1962 and it has become Detroit’s biggest revenue generator. In 2023, the city collected $408 million in municipal income taxes, a record-high amount. The next highest level of revenue for the city in 2023 was $224.7 million in state-shared revenue. The income tax was about 22% of the city’s $1.86 billion in total revenues.

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The city collected $361 million in income tax in 2019, the year before the pandemic. That source of revenue dropped to $290 million in 2020 due to the pandemic.

Detroit levies an income tax of 2.4% for residents, 1.2% for nonresidents, and 2.0% for corporations. Detroit has the highest income tax rates in the state of the 24 cities that have an income tax.

The city of Detroit stated the primary drivers behind income tax revenue are resident and nonresident employment levels and wages.

The number of city residents employed increased from 213,841 in 2021 when businesses were suffering from the pandemic to 233,224 in 2023. That number was 232,458 as of August 2024. The city estimates that remote work costs it about $35 million a year in lost revenues.