Does Michigan tax pensions and retirement income?
Taxed, with a retirement exclusion
Partly, and growing. Michigan is phasing back in its retirement and pension subtraction: up to 75% of the limit for 2025 and up to 100% from 2026, based on private pension limits.
In the state's own words
Copied word for word from the official document linked below each quote:
“Although subject to a temporary 4-year phase-in period, this law change essentially restores the pre-2012 retirement and pension subtraction while ensuring that taxpayers in unique circumstances are not harmed.”
“2025 January 1, 1946 - December 31, 1966 up to 75% 2026 (and beyond) N/A up to 100%”
And Social Security?
No. Michigan lists Social Security, to the extent it is in your federal adjusted gross income, among its subtractions. The Michigan Social Security page quotes the rule.
Federal tax still applies
Whatever Michigan does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) matter. Check with the Michigan Department of Treasury before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- Retirement and Pension BenefitsMichigan Department of Treasury. Read on November 12, 2026.