Is Michigan Good for Retirees? 2026 Tax, Estate, Probate Data

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: as of 2026, yes for most retirees — and this is the first year the full answer is true. Tax year 2026 completes the four-year phase-in of PA 4 of 2023 (HB 4001): all Michigan taxpayers, regardless of birth year, may deduct retirement and pension income — pensions, 401(k)s, IRAs — up to approximately $67,610 single / $135,220 joint (indexed annually; Treasury publishes final amounts). Social Security was never taxed. Guides still showing birth-year tiers or 2025’s 75% limitation are out of date.

How Michigan taxes retirement income in 2026 (statute-cited)

Income tax rate	Flat 4.25%
Social Security	Not taxed (fully deducted)
Pension / 401(k) / IRA	Deductible up to ≈$67,610 single / $135,220 joint for TY2026, all taxpayers (MCL 206.30; PA 4 of 2023; Treasury RAB 2026-1)
Military / railroad / police & fire pensions	Fully exempt, no cap
Estate / inheritance tax	None

What changed — the PA 4 of 2023 phase-in, by the numbers

Tax year	Deduction limitation	Cap (single / joint)
2025	75% of the Tier-1 cap	$49,422 / $98,845
2026	100% — fully restored	≈$67,610 / $135,220 (indexed; Treasury final)

Worked example — $60,000 of pension income: in 2025, the 75% cap left $10,578 taxable ≈ $450 of Michigan tax; in 2026, the full deduction covers it: $0. Bonus for TY2026–2028: PA 24 of 2025 lets taxpayers born after 1952, age 67+, claim both the retirement deduction and the Social Security deduction.

What settling an estate costs in Michigan

No estate or inheritance tax, and no statutory fee percentage — personal representative and attorney compensation must be reasonable (MCL 700.3719). But Michigan is unusual in levying a value-scaled probate court inventory fee on every estate (MCL 600.871 — e.g., $68.75 + 0.5% of the amount over $10,000 for estates between $10k and $25k, continuing to scale with estate value), plus $175 to open proceedings. Small estates: $53,000 for deaths in 2026 (indexed annually per MCL 700.1210; base raised $15,000 → $50,000 by 2024 legislation) via petition/assignment under MCL 700.3982 or transfer-by-affidavit under MCL 700.3983. Context: probate cost by state · small-estate limits by state · will vs. trust calculator.

The verdict, honestly

On retirement-income taxes, 2026 Michigan is genuinely competitive: a typical retiree drawing $60k–$100k (joint) from pensions and retirement accounts plus Social Security pays little or nothing. It doesn’t match the zero-income-tax states for very large withdrawals above the caps, and unlike them the deduction depends on a statute that phased in over four political years. No tax at death is a real advantage over inheritance-tax states like Pennsylvania. Snowbirds comparing a Florida domicile switch should weigh the full picture below.

Michigan vs. common alternatives

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
Michigan	Not taxed	Deductible up to ~$67,610/person (2026)	None	None
Ohio	Not taxed	Taxable; modest credits	None (repealed 2013)	None
Indiana	Not taxed	Fully taxable (state + county)	None	None (repealed 2012)
Wisconsin	Not taxed	Exclude up to $24,000/person at 67+ (2025 Act 15)	None	None
Florida	Not taxed	Not taxed (no income tax)	None	None

Comparison rows summarize each state’s general rules; see our 51-state retirement tax table for statute-cited detail on every state.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Michigan may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Michigan

Per the SEC’s July 2026 Investment Adviser roster, Michigan is home to 298 SEC-registered advisory firms (#14 nationally) managing $562.8 billion in regulatory assets (#24 by AUM). Median firm size is $372,819,349. Full breakdown: Michigan advisor statistics.

A move between states is exactly when fee structures and state tax rules deserve a second look — see our advisor cost guide and fee-drag calculator.

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Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Michigan:

Leaving Michigan? See leaving Michigan in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Michigan

Michigan sets probate compensation by a “reasonable fee” standard with no percentage schedule, so anyone quoting a firm figure is estimating. Whether its small-estate route of $53,000 reaches real property is not clearly stated in the statute, so treat that as unresolved rather than permission. Full detail with the governing statute, the court filing fee and the threshold: Michigan probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Michigan Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/michigan-retirement-taxes/. Free to cite with attribution and a link. Statutes and official sources are linked throughout; data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Is Michigan a Good State to Retire In? 2026 Taxes, Estate and Probate Data