(The Center Square) – Michigan’s economic outlook ranking dropped in 2026, according to a new report which was published on Tax Day.
The report from the American Legislative Exchange Council found Michigan’s overall economic outlook fell to 32nd nationally, down from 19th in 2025. This jump follows the state’s gradual decline in recent years, with it being ranked 12th nationally as recent as 2019.
The economic outlook ranking is based on 15 important state variables, like property tax burdens, state minimum wage, and personal income taxes. ALEC published this 19th annual “Rich States, Poor States” analysis, ranking states based on labor policies the conservative group says are most favorable to personal and corporate wealth.
“Each of these factors is influenced directly by state lawmakers through the legislative process,” the report explained. “Generally speaking, states that spend less – especially on income transfer programs – and states that tax less –particularly on productive activities such as working or investing – experience higher growth rates than states that tax and spend more.”
The Center Square has previously reported on Michigan’s unemployment rate, which comes in consistently high nationally.
Michigan’s economic performance ranking has also worsened in recent years to 35th nationally. Three variables are considered in this ranking: state gross domestic product, absolute domestic migration, and non-farm payroll employment.
In each of those areas, Michigan ranked:
• 31st in gross domestic product
• 41st in absolute domestic migration
• 33rd in non-farm payroll employment
The nonprofit Michigan Forward Network blamed Democrats for the state’s ongoing economic challenges, arguing their policies are hurting taxpayers.
“Gretchen Whitmer has fought tax relief for Michiganders at every turn,” said Gabe Butzke, a spokesperson for Michigan Forward Network. “Each time they fight a tax cut or try to raise fees, the message from Democrats is the same: we know how to spend your money better than you do.”
The report wasn’t all bad news for Michigan though. Looking at some of the rankings on the variables that make up the state’s economic outlook ranking, it ranked first for having no estate or inheritance tax levied.
It also ranked 3rd for the number of tax expenditure limits and 6th for the number of public employees per 10,000 of the state’s population.
Utah, Tennessee, Idaho, North Carolina, Arizona, Arkansas, Indiana, Oklahoma, South Dakota and Florida all ranked in the top ten on the report.
“When you compare Indiana to, say, Michigan, Illinois, Ohio, Iowa, and Ohio, its economy seems to be the best at delivering for workers,” Joshua Meyer, director of ALEC’s tax and fiscal policy task force, previously told The Center Square.
California, Connecticut, Hawaii, Illinois, Maine, Maryland, New Jersey, New York, Rhode Island and Vermont all finished at the bottom of the report.
