- every figure on this page.
- Income tax
- Flat 4.25%
- Social Security
- Exempt
- Retirement exclusion
- $67,610 per person, any age
- Standard deduction
- None
- Personal exemption
- $11,800 joint · $5,900 single
- Capital gains
- Taxed as ordinary income
How Michigan taxes retirement income
Michigan taxes income at one flat rate, 4.25%, whatever the amount and filing status[1].
The simulator applies no Michigan standard deduction; it subtracts personal exemptions of $11,800 on a joint return ($5,900 single).
Social Security benefits are exempt from Michigan income tax: none of the benefit enters the state base, as in 22 of the 24 states covered here that tax income.
At any age, each person can exclude up to $67,610 a year of IRA, 401(k) and pension distributions, so a couple can exclude up to $135,220 when each spouse has that much. In the worked examples the couple’s distributions are split evenly between the spouses, so each spouse’s cap applies to half.
Long-term capital gains and qualified dividends are taxed as ordinary income, at the same rates.
Put together, the example couple below owes $0 in Michigan, the lowest bill among the 24 states covered here that tax income, shared with 7 other states.
2026 rate
One rate, 4.25%, applies to all taxable income for every filing status; there are no brackets.
Worked example
A retired couple, both 67, filing jointly, with $48,000 of Social Security, $40,000 of IRA withdrawals and a $20,000 pension. The figures are computed when the page is built, by the same state-tax function the simulator runs.
| IRA / 401(k) withdrawals + pension | $60,000 |
|---|---|
| Social Security in the state base ($48,000 received, $40,000 federally taxable) | $0 |
| Less retirement exclusion | −$60,000 |
| Less standard deduction | −$0 |
| Less personal exemptions | −$11,800 |
| Taxable in Michigan | $0 |
| Michigan income tax | $0 |
| Share of $108,000 gross income | 0.00% |
The couple’s next $1,000 of IRA withdrawals would add $0 of Michigan tax.
A single retiree, 67, with half those amounts ($24,000 of Social Security, $20,000 of IRA withdrawals, a $10,000 pension) owes $0, 0.00% of gross income.
As IRA withdrawals rise
The same couple, with Social Security and the pension unchanged, taking more from their IRAs (a larger withdrawal, a required minimum distribution or a Roth conversion all count as distributions here):
| IRA withdrawals | Michigan tax | Share of gross income | Next $1,000 adds |
|---|---|---|---|
| $0 | $0 | 0.00% | $0 |
| $20,000 | $0 | 0.00% | $0 |
| $40,000 | $0 | 0.00% | $0 |
| $80,000 | $0 | 0.00% | $0 |
| $120,000 | $0 | 0.00% | $0 |
| $200,000 | $3,102 | 1.16% | $43 |
Neighbouring states
The example couple’s state tax in Michigan and in the neighbouring states covered here, same income and ages:
| State | Income tax | Social Security | Couple’s tax | Difference |
|---|---|---|---|---|
| Michigan | Flat 4.25% | Exempt | $0 | n/a |
| Indiana | Flat 2.95% | Exempt | $1,711 | +$1,711 |
| Ohio | 2.75% above a 0% band | Exempt | $1,134 | +$1,134 |
| Wisconsin | 3.5%–7.65% | Exempt | $0 | Same |
Against Michigan, the couple would pay more in Indiana (+$1,711), Ohio (+$1,134); the same in Wisconsin. With $200,000 of IRA withdrawals instead of $40,000, they would owe $3,102 in Michigan, against Indiana ($6,431), Ohio ($5,534), Wisconsin ($7,182).
What this page leaves out
What the simulator does and does not handle for Michigan, item by item[1]:
- Flat 4.25%.
- $5,900/person exemption (2026).
- Social Security exempt.
- Retirement/pension subtraction modeled with the completed 2026 phase-in: up to $67,610/person ($135,220 joint, 2026, indexed) of IRA/401(k)/pension income regardless of birth year.
- 2025’s 75% transition and birth-year tiers ignored.
In every state the simulator also leaves out credits, itemized deductions, deductions that phase out with income, local income taxes, surtaxes and any deduction for federal tax paid. It holds state amounts fixed and does not index them for inflation.
See it over a full plan
If you already have a saved plan, the link only takes you to the Household panel, where the state is set; your plan is not changed.
Related
This page shows how the rules work. It is not financial, tax or investment advice. State law has details these pages leave out, so check the state’s own instructions or ask a tax professional before you act. See the disclaimer.
Sources
- Michigan figures: the source we used for Michigan (michigan.gov) ↩
- IRS Publication 915: the federal worksheet for the taxable part of Social Security
Not yet verified. The full verification record for this entry is in the sources ledger, with every other figure the simulator uses on the sources page.