TSP Withdrawals And Michigan Income Tax

[wlls2]

Are Federal Thrift Savings Plan (TSP) withdrawals eligible for the tax exemption under the "Lowering MI Costs Plan" (Michigan Income Tax Return) or fully taxable? Why or why not?

[SabrinaD2]

Federal Thrift Savings Plan (TSP) withdrawals aren't generally  eligible for the tax exemption under the "Lowering MI Costs Plan" and are fully taxable in Michigan. Here's why:

1. Michigan taxes TSP withdrawals as ordinary income, similar to other retirement income
2. The "Lowering MI Costs Plan" provides tax exemptions primarily for pension and retirement benefits, but TSP withdrawals do not qualify under these specific exemptions

Excludable Retirement Benefits in Michigan include:

• Public Pensions: Benefits from federal, state, and local government pensions.
• Military Pensions: Retirement benefits received for services in the U.S. Armed Forces.
• Railroad Retirement Benefits: Benefits under the Railroad Retirement Act.
• Social Security Benefits: To the extent included in AGI

Michigan Resources:

• Lowering MI Costs Plan: Details on the tax plan and exemptions.
•  Information on the tax treatment of retirement benefits in Michigan.