Emergency-related state tax relief available for taxpayers located in four southwest Michigan Counties impacted by May 2024 storms.
Learn About Disaster Relief
2023 Tier I
2023 Tier I
Step 1 - Do you Have a Qualified Distribution?
- Use the 1099-R distribution chart to determine whether your retirement and/or pension benefits qualify as a subtraction.
- Determine if you are following the specific rules of the retirement plan. For a retirement distribution to qualify for a retirement/pension subtraction the taxpayer must retire under the specific rules of the retirement plan. Learn more about qualified distribution requirements depending upon your plan.
- Review Step 2 to determine your eligible subtraction.
If you do not qualify based on the distribution chart in step one, then you do not have a qualified retirement and pension benefit subtraction and step two is not applicable.
You may qualify for a deduction of capital gain, interest and/or dividend income. Use the estimator to determine your deduction amount.
Step 2 - Tier I Subtraction Option
MCL 206.30(9) outlines limitations to the retirement subtraction. If the retiree receives a qualified pension distribution per step 1, the allowable pension subtraction is calculated based on date of birth of the taxpayer (for single/married filing separate returns) or the oldest spouse (for married filing a joint return).
Tier I - Taxpayers Born Before 1946
Retirees may subtract all qualifying pension benefits received from federal or Michigan public sources to the extent included in adjusted gross income (AGI). The subtraction of public sources of pension income derived from other states is limited to private retirement maximums. Private benefits may be deducted up to the private pension limits, but any public retirement deduction claimed reduces the maximum private retirement deduction allowed.
The 2023 private retirement limits are:
- up to $61,518 if single or married filing separate, or
- up to $123,036 if married filing a joint return.
- These maximums are subject to reduction by the amounts claimed on Schedule 1 for the following retirement or pension benefits: U.S. Armed Forces, Michigan National Guard, and Railroad Retirement Act.
If public source pension benefits are greater than the maximum private retirement income amount, no additional retirement subtraction of private retirement benefits is allowed.
This group of retirees must file Form 4884, Pension Schedule.