Is my public pension allowed as a subtraction if I moved from another state into Michigan?

Pursuant to legislative changes, for tax year 2012 and forward, the allowable pension deduction is limited based upon the birth year of the single filer or the eldest spouse when filing a joint return.

For recipients born before 1946: Some states allow a full deduction or exemption for residents who receive a Michigan public pension. Therefore, the Michigan Department of Treasury will allow a deduction for the full amount included in AGI for Michigan residents receiving public pensions from the following states: Alaska, Florida, Hawaii, Illinois, Massachusetts, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington and Wyoming.

For tax year 2017, the subtraction of public pension from other states is limited to the greater of:

  • $50,509 for a single filer or
  • $101,019 for a joint return or
  • the amount allowed as a deduction by the other state to its residents on public pension received from Michigan.

For recipients born during the period January 1, 1946 through January 1, 1951: Filers born during the period January 1, 1946 through January 1, 1951 who reached age 67 on or before December 31, 2017, or where the older spouse was born during the period January 1, 1946 through January 1, 1951 and reached age 67 on or before December 31, 2017 if filing a joint return, are eligible for a deduction against all income and will no longer deduct retirement and pension benefits. The deduction is $20,000 for a return filed as single or married, filing separately, or $40,000 for a married, filing jointly return.

For recipients born after January 1, 1951 through December 31, 1952: The first $20,000 for single or married filing separately or $40,000 for married filing jointly, of all private and public pension and annuity benefits may be subtracted from Michigan taxable income. Benefits in excess of these limits are taxable to Michigan.

For recipients born after 1952: All pensions (private and public) and retirement benefits are taxable to Michigan unless the older of you or your spouse (if married filing jointly) was born on or after January 1, 1953 but before January 2,1956, have reached age 62 and receive Social Security exempt retirement benefits due to employment with a governmental agency, you may be eligible for a retirement and pension deduction.  For more information see Form 4884, Michigan Pension Schedule.

For more information and assistance in calculating your subtraction see Pension Information