Updated October 30, 2026. Quick answer: Partly, and it depends on your birth year. Form 4884 lists federal civil service among the sources: “Qualifying public benefits include distributions from the following sources”. Those born before 1946 may “subtract all qualifying retirement benefits received from federal or Michigan public sources”.
What Michigan does with a FERS or CSRS annuity
| Question | What the Michigan documents say |
|---|---|
| What the source says | Michigan lists federal civil service retirement benefits as qualifying public retirement benefits, which can be subtracted on Form 4884 up to a limit that depends on the retiree’s birth year. |
| Amount or limit | Born before 1946: all federal or Michigan public benefits can be subtracted, plus private benefits up to $65,897 single or $131,794 joint. Born January 2, 1959 through December 31, 1966: up to $49,423 single or married filing separate, or $98,846 joint. Those born from 1946 through 1959 use a different subtraction or a Standard Deduction tier. Those born after December 31, 1966 generally get no retirement subtraction; the instructions allow exceptions, including for surviving spouses. |
| Age or other test | Depends on year of birth; the $15,000 Social Security exempt rule requires age 62. |
| Change for 2026 | No 2026 change is printed in the state documents cited here. |
In the Michigan documents’ own words
- “These recipients may subtract qualifying retirement benefits up to $49,423 if single” (2025 Michigan Form 4884 Instructions, Pension and Retirement Benefit Subtraction)
- “unless allowed under another section, do not qualify” (2025 Michigan Form 4884 Instructions, Pension and Retirement Benefit Subtraction)
- “covered under the Civil Service Retirement System and hired prior to 1984” (2025 Tier III Retirement and Pension Benefits)
How this differs from other pensions in Michigan
Federal civil service benefits are public benefits, which are subtracted without a dollar cap for those born before 1946, while private benefits are capped; for later birth years the same subtraction limits apply to both. See also Does Michigan tax pensions? and military retirement pay.
FERS, CSRS and your TSP
The Form 4884 instructions list retirement distributions from Thrift Savings Plan among benefits that may not be subtracted, and IRAs after age 59½ among qualifying private benefits. For the Thrift Savings Plan itself, see Does Michigan tax TSP withdrawals? and the TSP calculator.
Where this rule sits on the Michigan return
The subtraction is figured on Michigan Form 4884. Married couples filing jointly use the birth year of the older spouse.
Checks before you rely on this answer
- Find your year of birth and, if married filing jointly, the older spouse’s, since the tier turns on it.
- Do not include Thrift Savings Plan distributions on Form 4884; the instructions list them among benefits that may not be subtracted.
- If you were in Social Security exempt employment, check whether the separate $15,000 rule at age 62 applies to you.
What the Michigan documents leave open
FERS is not named; the instructions say federal civil service only. The state tax rate was not read, and the amounts for the 1946 through 1959 birth years are worked by worksheet and are not restated here. No 2026 booklet exists yet.
Common mistakes
- Counting TSP withdrawals on Form 4884. The instructions list Thrift Savings Plan distributions among benefits that may not be subtracted.
- Using your own birth year on a joint return. Couples use the older spouse’s year.
Related: Does Michigan tax pensions?, Michigan military retirement pay, Michigan retirement deduction line by line, and FERS, TSP and Social Security sequencing.
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Answer againSources
- 2025 Michigan Form 4884 Instructions, Pension and Retirement Benefit Subtraction: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/4884-Instr.pdf
- 2025 Tier III Retirement and Pension Benefits: https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/retirement-and-pension-benefits/2025/2025-tier-iii
Read from the state documents linked above on October 30, 2026. General information, not tax advice.