Retiring in Michigan: how your income is taxed
Michigan is very tax-friendly for retirees. On a typical retirement income it ranks tied for #1 of 51 with 18 other states for the lowest state income tax.
The rules in Michigan
- Social Security: Social Security benefits are fully exempt from Michigan income tax.
- Pensions: 2026 is the first year of Michigan's fully phased-in retirement subtraction (Public Act 4 of 2023): taxpayers of any birth year can subtract public and private retirement benefits combined, up to $67,610 (single) or $135,220 (joint). Public-safety retirees (police, fire, state police and corrections) can deduct those benefits with no limit. The limit is reduced by any military or railroad retirement subtracted, and 457 deferred-compensation payouts generally don't qualify.
- 401(k), 403(b) and IRA withdrawals: IRA and 401(k) distributions count toward the same 2026 retirement subtraction as pensions ($67,610 single / $135,220 joint). Anything above the limit is taxed at Michigan's 4.25% rate.
Calculate your Michigan retirement taxes
State income tax in Michigan: $0 a year
In Michigan, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In Michigan you'd pay about $0 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,664 (6.2% total).
Michigan ranks tied for #1 of 51 with 18 other states for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Michigan
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $0 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $1,126 | $0 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply Michigan's main exclusions and may differ for income-tested credits.
Moving to Michigan in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Michigan come from (IRS migration data, 2022–2023).
- Florida to Michigan
- Ohio to Michigan
- Illinois to Michigan
- Indiana to Michigan
- Texas to Michigan
- California to Michigan
Frequently asked questions
Does Michigan tax Social Security?
Not taxed. Social Security benefits are fully exempt from Michigan income tax.
Does Michigan tax pensions?
Partly taxed. 2026 is the first year of Michigan's fully phased-in retirement subtraction (Public Act 4 of 2023): taxpayers of any birth year can subtract public and private retirement benefits combined, up to $67,610 (single) or $135,220 (joint). Public-safety retirees (police, fire, state police and corrections) can deduct those benefits with no limit. The limit is reduced by any military or railroad retirement subtracted, and 457 deferred-compensation payouts generally don't qualify.
Does Michigan tax 401(k) and IRA withdrawals?
Partly taxed. IRA and 401(k) distributions count toward the same 2026 retirement subtraction as pensions ($67,610 single / $135,220 joint). Anything above the limit is taxed at Michigan's 4.25% rate.
Is Michigan a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, Michigan charges about $0 in state income tax, ranking tied for #1 of 51 with 18 other states (lowest tax first).
Related
Sources: michigan.gov, michigan.gov (2), mersofmich.com. Rules reviewed . Some 2026 amounts were not yet published or sources differed; confirm with the state revenue department.