This deduction has undergone some changes in recent years. For people born after 1952, there is no longer a deduction at all. There still are deductions available for people born in 1952 and earlier. See below for the breakdown:
Who is Impacted by the Changes?For couples, the age of the oldest spouse determines the age category.
Pension recipients born before 1946:
- All qualifying benefits from public sources are exempt.
- Qualifying benefits from private sources may be deducted up to $51,570 for single/married filing separate filers and $103,140 for married filing joint in 2019.
- Any qualifying private pension payment in excess of the limits mentioned above is taxable.
Pension recipients born during the period 1946 through 1952:
- For recipients filing single or married filing separate, the first $20,000 of their qualifying pension (public/private) is subtractable from Michigan taxable income until they reach age 67.
- For filing joint, the first $40,000 of their qualifying pension (public/private) is subtractable from Michigan taxable income until they reach age 67.
- Recipients born in years 1946 – 1951 who have reached age 67, or with an older spouse born in years 1946 – 1951 who has reached age 67, will be eligible for the Michigan standard deduction against all income instead of deducting pension or retirement benefits for tax year 2018. The standard deduction is $20,000 for taxpayers filing single or married filing separate and $40,000 for taxpayers filing jointly.
- Filers who receive qualifying pension benefits from employment with a governmental agency exempt from the Social Security Act see “Benefits from Employment that was Exempt from Social Security” below.
Pension recipients born after 1952:
- All private and public pension and annuity benefits are fully taxable and may not be deducted from Michigan taxable income.
- Filers who receive qualifying pension benefits from employment with a governmental agency exempt from the Social Security Act see “Benefits from Employment that was Exempt from Social Security” below.
