Clear Money Guide
What this state guide covers
A quick view of the questions, practical details and source notes below.
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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 Guides still showing birth-year tiers or 2025’s 75% limitation are out of date.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.
What the tax picture means for your own accounts
A state guide can set out how the rules treat retirement income in general, but not how they land on your particular mix of pensions, withdrawals and savings, and an adviser can work that through with you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide is paid when you submit the form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
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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.
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:
- Michigan to Florida retirement taxes
- Michigan to Georgia retirement taxes
- Michigan to North Carolina retirement taxes
- Michigan to South Carolina retirement taxes
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. Its small-estate route of $53,000 reaches real property only where the conditions of MCL 700.3982 are met — subsection (5) counts real property inside the gross estate and directs how to value it when it is mortgaged, so the route contemplates a house even though the section stops short of saying so in terms. 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.
Primary sources
- https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/retirement-and-pension-benefits
- https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-206-30
- https://legalclarity.org/michigan-retirement-income-subtraction-rules-and-recent-updates/
- https://taxfoundation.org/data/all/state/estate-inheritance-taxes/
- https://www.michigan.gov/treasury/-/media/Project/Websites/treasury/ORTA/Economic-Reports-Notices/FY-2026/Notice_01302026_EstatesAndOtherProtectedIndividuals_Signed.pdf
- https://www.courts.michigan.gov/490e3c/siteassets/court-administration/resources/pfee.pdf
- https://cflegal.net/what-is-michigans-53000-small-estate-threshold-in-2026/