2017 Retirement & Pension Benefits Guidance

Taxpayers born before 1946 (Tier 1)

  • Social Security is exempt.
  • Senior citizen subtraction for interest, dividends, and capital gains up to $11,259 for single filers and $22,518 for joint filers.*
  • Public pensions exempt.
  • Private pensions, subtract up to $50,509 for single filers and $101,019 for joint filers.

*Subtraction may be limited if pension benefits are also subtracted.

Taxpayers born 1946 through 1952 (Tier 2) Before the taxpayer reaches age 67

  • Social Security is exempt.
  • Railroad and Michigan National Guard pension is exempt.
  • Military compensation and pension is exempt.
  • Not eligible for the senior citizen subtraction for interest, dividends, and capital gains.
  • Public and private pension limited subtraction of $20,000 for single filers or $40,000 for joint filers.
  • Pensions from employment with governmental agencies not covered by the Social Security Act. $35,000 for single filer, $55,000 for joint filers, or $70,000 for joint filers if both spouses worked for an “uncovered” agency.

Taxpayers born 1946 through 1952 (Tier 2) After the taxpayer reaches Age 67

  • Social Security is exempt.
  • Railroad and Michigan National Guard pension is exempt (see below).
  • Military compensation and pension is exempt (see below).
  • Not eligible for the senior citizen subtraction for interest, dividends, and capital gains.

Eligible for Standard deduction:

  • Subtraction against all income of $20,000 for single filers and $40,000 for joint filers.
  • Subtraction increased to
    • $35,000 for single filers and
    • $55,000 for joint filers with pensions from employment with governmental agencies not covered by the Social Security Act, or to $70,000 for joint filers if both spouses worked for an “uncovered” agency.
  • Not eligible for this income subtraction to the extent Military income and Railroad/Michigan National Guard pension exemption is claimed.

Taxpayers born after 1952 (Tier 3) Before the taxpayer reaches age 67

  • Social Security is exempt.
  • Railroad and Michigan National Guard pension is exempt.
  • Military compensation and pension is exempt.
  • Not eligible for the senior citizen subtraction for interest, dividends, and capital gains.
  • Not eligible for public or private pension subtraction.
  • At age 62, pensions from employment with governmental agencies not covered by the Social Security Act. $15,000 for single or joint filers or $30,000 for joint filers if both spouses worked for an “uncovered” agency.

Taxpayers born after 1952 (Tier 3) After the taxpayer reaches Age 67 (will first occur in 2020)

  • Not eligible for the senior citizen subtraction for interest, dividends, and capital gains.
  • Not eligible for public or private pension subtraction.
  • Income exemption election:
    • Elect exemption against all income of $20,000 for single filers or $40,000 for joint filers
      Note: No exemption for Social Security, Military compensation and pension, and Railroad/Michigan National Guard pension. No personal exemptions

      OR
       
    • Elect to exempt SocialSecurity, Military compensation and pension, and Railroad/Michigan National Guard pension. May claim personal exemptions.