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.
Assumptions behind this comparison
The ranking uses a full-year resident, single filer age 67, with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals under 2026 rules. It models a general private pension and traditional IRA withdrawals. Public or military pension exceptions, early-distribution penalties and itemized deductions require separate checking. Maryland and Indiana estimates include an approximate statewide-average county income tax; other local income taxes are not modeled. A state with no income tax differs from a state that exempts only specified retirement income.
The joint table uses two spouses age 67, with each income category split equally between them. Personal exclusions follow each spouse's own eligible income; some states instead allow a joint cap. The calculator initially assigns household income to you and lets you enter your spouse's actual age and share. Read the source instructions for your pension type.
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, qualifying employer-plan withdrawals can receive the pension exclusion while traditional IRA withdrawals do not. Keep each account in its own field when changing state; the calculator applies the state-specific treatment.
The employer-plan field supports federally taxable private 401(k) / 403(b) retirement distributions owned by someone aged 60 or older. Earlier distributions and Hawaii, Mississippi or Pennsylvania employer-plan scenarios are not calculated; funding or plan retirement eligibility needs a separate check. Enter each amount once; do not include completed rollovers, Roth payments or special public/military plans.
Older shared links did not identify employer-plan withdrawals separately. Pension and IRA amounts have been left unchanged. If an old amount includes 401(k) or 403(b) withdrawals, move that portion into the employer-plan field before comparing states; the tool cannot infer the original account type.
Household totals include taxable private pensions and traditional retirement withdrawals. Other ordinary income means taxable interest and ordinary dividends; capital gains, qualified dividends, tax-exempt interest, wages, Roth distributions and special public or military pension rules need a separate calculation. Disability and survivor eligibility are not assessed by this tool. Age bands represent the listed ages for the full year; midyear eligibility and birth-date exceptions need checking.
Local income taxes are not modeled here, except the approximate statewide-average county rates included when you select Maryland or Indiana.
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 traditional IRA withdrawals | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals | $0 | $0 | $4,336 |
| $40,000 Social Security, $40,000 private defined-benefit pension, $50,000 traditional IRA withdrawals, $10,000 other income | $1,126 | $0 | $19,812 |
Age 67, 2026 rules including the federal senior deduction. For the joint column, income is the household total, both spouses are 67, and each owns 50% of every income category. 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 private defined-benefit pension, $20,000 traditional IRA withdrawals, 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.