State of Michigan:
Tax rate
The rate for tax year 2023 is 4.05%
Exemptions:
1) Personal exemption for 2023 is $5,400
2) Phases out personal exemption for taxpayers with “total household resources” over $75,000 for single filers and $150,000 for joint filers. Eliminates personal exemption for taxpayers with total household resources over $100,000 for single filers and $200,000 for joint filers.
3)
Special Exemptions:
1) Deaf. An individual whose hearing is totally impaired.
2) Paraplegic. A individual who has paralysis of the lower half of the body.
3) Quadriplegic. An individual who has paralysis of both arms and legs.
4) Hemiplegic. An individual who has paralysis of one side of their body.
5) Blind. An individual who has permanent impairment of both eyes of the following status; 20/200 or less in the better eye with corrective glasses or 20/200 if there is less than 20 degree vision field..
6) Totally and Permanently Disabled. An individual who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months.
MICHIGAN STATE INCOME TAX CHANGES FOR RETIREMENT BENEFITS
NOTE: For joint returns, the age of the oldest spouse determines the age category that will apply to the pension and retirement benefits of both spouses regardless of the age of the younger spouse.
Taxpayers born before 1946
1) No change in current law
2) Social Security is exempt.
3) Senior citizen subtraction for interest, dividends and capital gains is unchanged.
4) Public pensions exempt.
5) Private pensions subtract up to $56,961 for single filers and $113,922 for joint filers.
Taxpayers born 1946 to 1958
Before the taxpayer reaches age 67
1) Social Security is exempt.
2) Railroad pension is exempt
3) Military pension is exempt
4) Not eligible for the senior citizen exemption for interest, dividends and capital gains.
5) Public and private pension limited subtraction of $20,000 for single filers or $40,000 for joint filers.
6) Not eligible for pension subtraction when total household resources exceed $75,000 for single filers or $150,000 for joint filers.
After the taxpayer reaches age 67
1) Social Security is exempt.
2) Not eligible for senior citizen subtraction for interest, dividends and capital gains.
3) Subtraction against all income of $20,000 for single filers and $40,000 for joint filers.
4) Not eligible for income exemption when total household resources exceed $75,000 for single filers or $150,000 for joint filers.
5) Not eligible for income exemption if claiming a military or railroad pension exemption.
Taxpayers born after 1952
Before the taxpayer reaches age 67
1) Social Security is exempt.
2) Railroad pension is exempt
3) Military pension is exempt
4) Not eligible for the senior citizen subtraction for interest, dividends and capital gains.
5) Not eligible for public or private pension subtraction.
After the taxpayer reaches age 67
1) Not eligible for senior citizen exemption for interest, dividends and capital gains.
2) These taxpayers who choose to take the $20,000/$40,000 deduction against all income will have that deduction reduced by the taxable portion of Social Security and any personal exemptions claimed.
Income exemption election
1) ELECT exemption against all income of $20,000 for single filers or $40,000 for joint filers.
2) No exemption for Social Security, military or railroad retirement
3) No personal exemptions.
4) Not eligible for income exemption when total household resources exceed $75,000 for single filers or $150,000 for joint filers.
*OR*
1) ELECT to exempt Social Security, military and railroad pension. May claim personal exemptions.
2) Personal exemptions are subject to phase-out for total household resources between $75,000-100,000 for single filers and $150,000-200,000 for joint filers.
