Michigan PIP Wage Loss: 85%, a Monthly Cap, and 3 Years

You got the first check. You think you’re covered. Then month 37 hits and the checks stop, and nobody warned you this day was coming.

If you were hurt in a Michigan car crash and you’ve been collecting PIP wage loss through your own auto insurance, there’s a cliff waiting at the three-year mark. Most injured workers don’t see it until they fall off it. This post is the napkin-math version of what your attorney should have drawn for you in month one.

Numbers below are current as of October 2026. DIFS updates the cap every October 1.

Does Michigan PIP really pay 85% of your wages?

Yes, 85% of your gross lost income, but only up to a monthly cap. Michigan’s No-Fault Act, MCL 500.3107(1)(b), pays “work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured.”

The 85% comes from a tax rule in the same subsection. PIP wage loss isn’t taxable income, so the statute reduces it by 15% to approximate what you’d have taken home. If your real tax advantage is smaller (common for lower earners), you can give the insurer reasonable proof and the lower reduction applies.

For most working people, that lands close to a normal paycheck, but only if your gross wages fit under the monthly cap. Higher earners often don’t.

If you were hurt in a crash while on the job, Michigan workers’ comp is generally paid first, and PIP wage loss is reduced by what it pays.

What is the monthly wage loss cap in Michigan?

For crashes from October 1, 2026 through September 30, 2027, the cap is $7,455 per 30 days. For crashes from October 1, 2025 through September 30, 2026, it was $7,201. The Department of Insurance and Financial Services (DIFS) adjusts the cap every October 1, and the cap in effect on your crash date applies to your whole claim.

Let’s do real numbers using the current $7,455 cap.

Say you were grossing $95,000 a year, about $7,917 a month. Eighty-five percent of that is $6,729. You’re under the cap, so you get roughly $6,729 a month.

Now say you were grossing $120,000, or $10,000 a month. Eighty-five percent is $8,500. The cap cuts you to $7,455. That’s $1,045 a month lost to the ceiling.

Run that over 36 months and it’s more than $37,000 of lost income PIP will never pay.

If you’re a tradesperson clearing six figures with overtime, a nurse stacking shifts, or any Michigan worker grossing more than roughly $8,770 a month (about $105,000 a year) under the current cap, the cap is eating into your claim every month.

When does Michigan PIP wage loss stop?

Three years after the date of the crash. Not three years from when you stopped working or when benefits started. MCL 500.3107(1)(b) only covers income you would have earned “during the first 3 years after the date of the accident.”

After that, PIP wage loss checks stop. That’s true whether you’re still disabled, whether your doctor still has you off work, and whether your injuries got worse in year two.

If your crash was on April 13, 2023, PIP wage loss covers lost income through April 13, 2026. Month 37 is the wall.

This isn’t a loophole. It’s written into the statute. A good attorney tells you about it on day one, not after it happens. If yours didn’t, read whether it’s too late to switch lawyers mid-case.

How do 1099 and gig workers prove wage loss?

With paperwork, lots of it. If you’re W-2, your claim is mostly pay stubs. If you’re 1099, gig, rideshare, contract, or self-employed, expect the hardest wage loss fight there is.

PIP insurers typically ask for:

• Two to three years of federal tax returns, including Schedule C
• 1099s from every payer
• Bank deposit records
• Client invoices and contracts
• Proof of jobs you had lined up but couldn’t work

Then they may argue your income was declining anyway, that the work wasn’t guaranteed, or that your “real” loss is much smaller. If your attorney isn’t building that record from month one (banking history, client statements, a reconstruction of your book of business), proof problems alone can cost you.

What happens after year three if you still can’t work?

There’s no fourth year of PIP wage loss, but there are two possible bridges, and both need to be built early.

Bridge one: a claim against the at-fault driver for excess wage loss. MCL 500.3135(3)(c) lets you recover work loss above the monthly cap and beyond the three-year limit from the at-fault driver. This “excess economic loss” claim does not require meeting the serious-impairment threshold that applies to pain and suffering. The at-fault driver does get a reduction for the taxes you would have paid. The catch: the lawsuit generally has to be filed within three years of the crash under MCL 600.5805, about when PIP wage loss ends. See who pays what after a Michigan crash and Michigan’s 3-year clock.

Bridge two: Social Security Disability Insurance. SSDI has its own medical standard, a five-month waiting period, and a long application process. For a worker permanently sidelined by a crash, it’s often the long-term income floor after PIP ends, so applying well before month 37 matters.

A second-opinion attorney should be mapping both bridges in month six, not month thirty-seven.

Is a quiet file a bad sign?

It can be. If your PIP wage checks arrive on time and your lawyer hasn’t talked to you about the cap, the three-year cutoff, the excess wage claim, or SSDI, your file may not be getting worked. It may just be getting watched. (Here’s what months of silence from your lawyer can mean.)

There’s a difference between a lawyer who waits for the case to end and a lawyer who builds the runway. The first lets month 37 happen to you. The second has been preparing for it since month one. (Some quiet is normal; here’s why Michigan injury cases take so long.)

If you’re somewhere between month six and month thirty of a Michigan wage loss claim and nobody has drawn this map for you, get a free second opinion on your file. Before the cliff, not after.

This article is general information about Michigan law, not legal advice for your situation.