Will My Michigan Pension Get Taxed?

As you prepare for retirement, taxes may be top of mind. A 2011 change to taxation of Michigan pensions remains relevant for Michigan retirees today.

Under this law, your taxation is divided up based upon your birth year (Source: Michigan.gov website):

  • Born before 1946: Your pension is not taxed by the state of Michigan.
  • Born on or after 1/1/46 to 12/31/1952: Some of your pension gets taxed. You can subtract $20,000/$40,000 for married couple from your pension income to determine taxation. After age 67 (or for the oldest spouse if married), that reduction applies to all forms of income.
  • Those born in 1953 or later: Your pension is subject to Michigan income tax until age 67 when they can subtract $20,000 from taxable income, if single, or $40,000 from taxable income for couples filing jointly.

Other considerations: There are a variety of factors that affect your retirement planning and taxes. Those can include your sources of income, planning on how you will access retirement savings such as what order will you spend out of taxable, tax-deferred and tax-exempt assets, Social Security claiming decisions and much more.

We always recommend that you review your personal retirement situation by updating your financial plan with a financial planner. If you have questions about your retirement preparedness or are looking to get serious about retirement, make use of the following resources: