State retirement tax · Michigan
Retirement tax rules for Michigan residents (2026 guide)
2026 is the year Michigan finished undoing its 2012 pension tax: retirees of any age can now deduct public and private retirement income up to $67,610 (single) or $135,220 (joint) before the flat 4.25% rate applies. Social Security was never taxed, and the homestead property tax credit still helps lower-income households.
By Mindaugas Laucius · Last reviewed October 21, 2026
Rate on retirement income
~0%*
Taxes Social Security?
No
Approx. tax on $90k retirement income
$0
Pension carve-outs
Yes
Quick figures: a single filer with $90,000 of income, $30,000 of it Social Security.
The retirement deduction, fully phased in
Public Act 4 of 2023 phased the old age-tiered limits out over four years; for tax year 2026 every eligible taxpayer can deduct pension, annuity, 401(k) and IRA income up to $67,610 single / $135,220 joint. The cap is indexed to inflation each year. Social Security is fully exempt and doesn't count against it.
Source: Michigan Treasury — retirement and pension benefits ↗
Homestead property tax credit
Michigan refunds part of property tax (or rent) for households with total household resources up to $71,500, with the credit capped at $1,900 for tax year 2025 and phasing down above $62,500. Proposal A also limits how fast a home's taxable value can rise to the lower of 5% or inflation until the home sells.
Source: Michigan Treasury — 2025 homestead property tax credit ↗
Sales tax
The state sales tax is 6% with no local add-ons; groceries and prescription drugs are exempt.
Worked examples
A single retiree at 68
- $50,000 pension (under the $67,610 cap) + $30,000 of Social Security (exempt).
Michigan income tax: $0.
A couple above the cap
- $160,000 of pension and IRA income − $135,220 joint deduction = $24,780.
- $24,780 × 4.25% = $1,053.15 before personal exemptions.
About $1,053.
Recent and pending changes
- 2026: the retirement deduction reached 100% for all birth years (Public Act 4 of 2023).
Run your own numbers — pick Michigan in the calculator’s Taxes tab for a year-by-year estimate. Or compare all 50 states and DC.
Thinking about a move? The free state-to-state retirement tax comparison puts Michigan next to any other state on your own income.
Michigan questions
Does the Michigan retirement deduction depend on my birth year anymore?
Not for 2026 — the phase-in is complete, so every eligible retiree uses the same $67,610 / $135,220 limit.
Does Michigan tax Social Security?
No.
Can I claim the homestead property tax credit if I rent?
Yes — renters count 23% of rent as property tax when figuring the credit, subject to the same income limit.