Updated September 4, 2026. Quick answer: It depends on your birth year, and 2026 is the year this stops mattering for most people. Michigan phases in a pension subtraction for everyone that reaches 100% of the CPI-adjusted private-pension maximum ($65,897 single/$131,794 joint for 2025) by tax year 2026 (2023 Public Act 4); until then, retirees choose whichever of several birth-year-tiered methods is most favorable. Military retirement pay is already fully exempt at any age.
More on public pension systems, topic by topic: Michigan MPSERS post-retirement increases, Michigan MPSERS working after retirement and Michigan MPSERS disability retirement.
State retirement-income forms, line by line: Michigan Form 4884.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Michigan tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Michigan tax 403(b) and 457(b) withdrawals.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Michigan tax withholding on pension payments.
The Municipal Employees’ Retirement System of Michigan options, refund and DROP rules, from the system’s own documents: Michigan MERS retirement decisions.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Michigan a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Michigan tax the profit from selling your home?.
The Detroit Police and Fire Retirement System options, DROP and survivor rules, from the system’s own documents: Detroit police and fire retirement decisions.
The state’s income tax schedule: the Michigan 2026 tax brackets (pending).
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Michigan tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Michigan tax TSP withdrawals?.
A pension earned in another state, or paid after a move, is covered here: does Michigan tax out-of-state pensions.
The Detroit GRS pension options and refund rules, from the system’s own pages: Detroit GRS retirement decisions.
Trusts have their own page: does Michigan tax trust income.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Michigan have an inheritance tax?.
Dividends and interest have their own page: does Michigan tax dividends and interest.
Annuity payments have their own page: does Michigan tax annuity income.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Michigan have an estate tax?.
Military retired pay has its own page: does Michigan tax military retirement.
Saving for a child’s college? The state’s 529 break has its own page: Michigan 529 plan tax deduction.
Selling stocks, funds or real estate has its own page: does Michigan tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Michigan tax 401(k) and IRA withdrawals.
The Michigan MPSERS payment options and refund repayment rules, from the Office of Retirement Services’ own pages: Michigan MPSERS retirement decisions.
More on Michigan: What Adult Guardianship Costs in Michigan, How Much Does a Living Trust Cost in Michigan? and How Much Does a Will Cost in Michigan?
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Michigan taxes retirement income generally.
The rule in the source’s own words. Michigan Compiled Laws, MCL 206.30: “For the 2026 tax year and each tax year after 2026, a taxpayer may deduct retirement or pension benefits as provided under subsection (1)(f)” (source, read October 5, 2026). This page’s governing citation: MCL 206.30, subsections (1)(e), (1)(f), (8), (9), (10), (11), as amended by 2025 Act 24 and 2026 Act 39.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Retirees born before 1946 are fully exempt, uncapped. Later birth years use a capped standard deduction or a phase-in subtraction that reaches 100% of the CPI-adjusted private-pension maximum (public and private benefits combined) for everyone starting tax year 2026, under 2023 Public Act 4. |
|---|---|
| Private (employer) pensions | Same birth-year tiers as public pensions; for the earliest tier, private pensions share a separate CPI-adjusted cap ($65,897 single/$131,794 joint for 2025), reduced by any public pension already claimed. |
| Federal government pensions (FERS/CSRS) | Same tiered treatment as Michigan public pensions; Michigan’s own statute annotation explicitly cites Davis v. Michigan Dept. of Treasury (1989), the case that originated in Michigan and set this parity requirement nationally. |
| Military retirement pay | Fully exempt, uncapped, at any age. |
| IRA and 401(k)/403(b) distributions | Splits by type: ordinary IRA distributions after age 59 1/2 qualify for the same birth-year-tiered treatment as pensions, but employee-directed 401(k)/403(b)/457 elective deferrals do not qualify and are fully taxable; employer-mandated or employer-contribution 401(k) amounts do qualify. |
| General retirement-income exclusion | A separate interest/dividends/capital-gains subtraction exists only for those born before 1946 ($14,688 single/$29,376 joint for 2025), reduced by any pension subtraction already claimed; this is not a general retirement-income exclusion for all filers. |
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How our partner relationships workSocial Security
Social Security is never taxed by Michigan. Social Security has its own rules in every state; see the full breakdown in how Michigan taxes retirement income generally.
Figures verified against MCL 206.30, the Michigan Department of Treasury retirement and pension guidance and military retirement FAQ, and the tax year 2025 Form 4884, MI-1040 booklet and Schedule 1 on September 30, 2026.
Statute and sources
Governing citation: MCL 206.30, subsections (1)(e), (1)(f), (8), (9), (10), (11), as amended by 2025 Act 24 and 2026 Act 39.
- Michigan Dept. of Treasury, 2025 Tier I Retirement Guidance
- Michigan Compiled Laws 206.30
- Michigan Dept. of Treasury, military retirement FAQ
Read September 4, 2026.
Related: how Michigan taxes retirement income generally · does Michigan tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.