Michigan RMD on Inherited IRA Taxable?

[syoung123]

Hello, my wife inherited an IRA from her mother in 2019, and the brokerage firm started doing the required minimum distribution (RMD) on the inherited IRA account in tax year 2020.  The RMD had been taxable in Michigan then.  My wife was age 67 as of the end of 2024.  The Michigan pension and retirement income rules changed in tax year 2024 (or before?), such that part or all of the retirements are not subject to state tax for people over certain ages.  For the RMD on the inherited IRA, is the RMD considered as retirement income also and therefore not taxable in Michigan?

[MaryK4]

Yes, the RMD is retirement income but is not qualified for the retirement exclusion in Michigan for your wife.  Michigan implemented a multi-tier system with different amounts based on age that is being phased in over the course of four years.  TurboTax is up-to-date on the reporting and subtractions currently in place for 2024.   Retirement Subtraction Options

[Edited 02/11/25 | 9:56am PST]

[syoung123]

Thank you for the reply.  When I clicked on the retirement subtraction options link that you provided, then clicked the people born after Jan 1953, the 1099R distribution chart appears to say for code 4 death, only the inherited IRA for surviving spouse is qualified to be excluded from the state tax.  My wife's inherited IRA was from her mother, so the RMD is taxable? Please clarify.  Thank you

[MaryK4]

Yes, your wife's inherited IRA would be taxable to your spouse.  I corrected the answer above to account for her age category. @syoung123 

[syoung123]

Hello, I don't think the reason is age.  the 1099R chart appears ton say only the inherited IRA from spouse ( as surviving spouse) can be excluded.  Since my wife inherited the IRA from her mother,  it is not qualified.  Please confirm.  I know the bottom line is the RMD is subject to Michigan state tax, but I want to make sure of the reason, because if it is age related, at some point it may be qualified as her age changes.  Thank you.