No, 457 plans distributions are taxable on the Michigan tax return. Here is an excerpt from Michigan.gov about the retirement distribution subtraction:
"What Distributions Do Not Qualify for a Subtraction?
Certain distributions reported on form 1099-R are not retirement or pension benefits. Under Michigan law, deferred compensation is taxable. These distributions include:
- All distributions from 457 plans
- Distributions from 401(k) or 403(b) plans sourced to employee contributions and the earnings from those contributions if they were not matched by the employer.
- Early distributions under the terms of the retirement plan are always taxable regardless of the date of birth of the taxpayer. (See retirement code chart for 1099-R below.)"
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