Updated October 7, 2026. Quick answer: Yes, generally. Michigan’s Retirement and Pension Schedule (Form 4884) instructions list “Retirement distributions from Thrift Savings Plan” among the “Public and private retirement benefits that may not be subtracted”, so a TSP withdrawal that is in federal adjusted gross income stays in Michigan taxable income. The 2025 rate is 4.25%.
Michigan TSP withdrawal tax treatment at a glance
| Item | What the documents say |
|---|---|
| TSP withdrawals | Taxed: Form 4884 lists TSP retirement distributions among the benefits that may not be subtracted |
| FERS annuity | Form 4884 lists federal civil service among the qualifying public benefits for the retirement subtraction, so a federal civil service annuity can qualify while a TSP withdrawal is on the not-subtractable list |
| Rate or limit printed | 4.25% for tax year 2025 |
| Where it is reported | Retirement and Pension Schedule (Form 4884); Schedule 1 |
| Source | Michigan Department of Treasury |
What the Michigan documents say
The 2025 instructions for Form 4884 sort retirement money into what Michigan lets you subtract and what it does not. Under “Public and private retirement benefits that may not be subtracted” the list includes 401(k) and 403(b) money attributable to unmatched employee contributions, 457 plans and, on its own line, “Retirement distributions from Thrift Savings Plan”.
Money that is not subtracted stays in the income Michigan taxes. The MI-1040 instructions give the rate: “For tax year 2025, the Michigan income tax rate is 4.25%”.
A worked example at $30,000 of withdrawals
An illustration, not a return: a Michigan resident takes $30,000 from the TSP in 2026 and it is in federal adjusted gross income. With no other Michigan subtraction available for it, the 2025 rate of 4.25% would put, computed as $30,000 times 4.25%, $1,275 of Michigan tax on it. The 2026 rate is not printed in the 2025 instructions, so treat the figure as the 2025 arithmetic.
If you moved to Michigan or left it
The rules above are Michigan’s own, for a resident. Federal law limits what a state you have left may do: “No State may impose an income tax on any retirement income” of someone who is not a resident or domiciliary of that state, as 4 U.S.C. 114(a) puts it. The statute defines retirement income by reference to plans described in the Internal Revenue Code; this page does not decide whether a particular TSP payment meets that definition. If you moved during the year, check each state’s page and return. See CMG’s TSP withdrawal options and FERS, TSP and Social Security sequencing pages for the federal side.
What changes in 2026
The documents read for Michigan announce no change for 2026 that is specific to TSP withdrawals. The instructions read are for tax year 2025, the newest archived; check the state agency for the 2026 forms when they are published.
What the documents do not say
- The instructions read are for tax year 2025, the newest archived; no 2026 rate is printed in them. The list of benefits that may not be subtracted is a list of Form 4884 treatment and is not a ruling on any one person’s facts.
Common mistakes
- Entering a TSP withdrawal on Form 4884 as retirement income to subtract; the instructions list TSP distributions as not subtractable.
- Assuming a federal civil service annuity and a TSP withdrawal get the same treatment; the instructions list them differently.
- Assuming the answer for one state applies to another, or that the state answer changes the federal tax on the withdrawal.
Related: TSP withdrawal options, state tax on TSP withdrawals, Michigan retirement taxes, how Michigan taxes pensions, and how Michigan taxes 401(k) and IRA withdrawals.
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Answer againSources
- 2025 Michigan Retirement and Pension Schedule (Form 4884) Instructions: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/4884-Instr.pdf
- 2025 MICHIGAN Individual Income Tax MI-1040 Instructions: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf
- 4 U.S.C. 114, Limitation on State income taxation of certain pension income (U.S. Code, GovInfo): https://www.govinfo.gov/content/pkg/USCODE-2023-title4/html/USCODE-2023-title4-chap4-sec114.htm
Sources: the primary documents linked above, read on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.