Retired individuals may receive benefits from a variety of retirement and pension plans which may be included in Adjusted Gross Income (AGI) and thereafter subject to federal income tax. Although benefits included in AGI are generally also subject to the Michigan individual income tax, Section 30(1)(f) of the Michigan Income Tax Act, MCL 206.30(1)(f), authorizes a deduction for certain retirement or pension benefits. This deduction is generally based on the type or source of the benefit but may be subject to special limitation. In accordance with the recent changes to Section 30 made by Public Act 4 (PA 4) of 2023, this RAB discusses the calculation of the deduction for retirement and pension benefits in Michigan.

Because the statute refers to the retirement or pension benefits deductions as deductions and Treasury’s forms refer to them as subtractions, this RAB may use the terms interchangeably.

A pension is generally a series of definitely determinable payments made to an employee after retiring. Pension payments are made regularly and are based on factors like years of service and prior compensation. Internal Revenue Service Publication 575. An employee retirement benefit plan is any plan, fund, or program that is established or maintained by an employer or employee organization that provides retirement income to employees. 29 USC 1002(2)(A). Individuals may also have retirement accounts created under various sections of the IRC that may or may not be part of an employer plan, or that may be retirement plans for the self-employed.

The MITA uses the term “retirement or pension benefits” to collectively refer to distributions falling into any one of three categories:

(1) pension trusts and annuity plans that qualify under section 401(a) of the IRC, including self-employment plans such as Keogh or HR 10 plans, certain individual retirement accounts where the distribution is a qualified one, 403(b) plans offered by a 501(c)(3) organization or public school system, and 401(k) plans where employee contributions are mandated by the plan or attributable to employer contributions;

(2) certain plans not qualified under the IRC, including plans created by various levels of governments such as the United States, states other than Michigan, and political subdivisions of this state, as well as church plans, and any plan where the distribution is from a pension trust and the plan prescribes the contributions and retirement eligibility; and

(3) benefits received by a surviving spouse if the benefits qualified for a deduction prior to the decedent’s death. MCL 206.30(1)(f) and MCL 206.30(8).

When referring to retirement or pension benefits as defined under MCL 206.30(8), this RAB will collectively refer to income, benefits, or distributions from either a qualifying retirement or a pension plan as “ retirement income” , “benefits” , or “distributions” .

For tax purposes, the IRC separates retirement benefit plans into two categories: qualified and nonqualified plans. A qualified plan is one that “qualifies” for special tax treatment because it complies with certain IRC provisions. Nonqualified plans defer compensation or otherwise provide benefits payable at retirement or termination of employment that do not qualify under the IRC and are not entitled to favorable tax treatment. To qualify for favorable tax treatment under the IRC, a retirement plan must meet certain standards such as minimum vesting requirements, minimum distribution requirements, and certain nondiscrimination criteria. For Michigan purposes, qualifying retirement benefits include most payments that are reported on a Form 1099-R for federal tax purposes. This includes defined benefit pensions, Individual Retirement Arrangement (IRA) distributions, and most payments from defined contribution plans. The distinction between qualified and nonqualified plans is important because it may allow a recipient to subtract some or all of a distribution that is included in AGI.

Before Public Act 38 of 2011 (PA 38), taxpayers could subtract most qualified retirement distributions on the Michigan return, to the extent included in AGI, with some dollar limitations on distributions from private employers, certain public employers from other states, and on qualified distributions from individual plans such as IRAs, self-employed plans, and senior citizen annuities. The subtraction applied in full to federal and Michigan public retirement benefits, including benefits from political subdivisions of Michigan, as well as military retirements, and Tier 2 railroad retirements. Tier 1 railroad retirement benefits were taxable at the federal level as Social Security and were subtracted on the Michigan return in the same way as Social Security, to the extent included in AGI.

A private retirement benefit maximum applied to qualified distributions generally from individual IRAs, private employer retirement plans, plans for self-employed people, and qualified senior citizen retirement annuities. MCL 206.30(1)(f)(iv). The amount and nature of this maximum varied over time, but beginning in 2007, the maximum was $42,240 for single returns and $84,480 for joint returns, and it has been indexed for inflation each year since 2008. In addition, the maximum had to be reduced by certain income. This RAB refers to this subsection 30(1)(f)(iv) provision as the “ private retirement maximum ” or “ private retirement benefit maximum ”. Individuals with retirement income from both public and private sources were required to reduce the maximum allowable subtraction for the private plan benefits by any public retirement benefits subtracted.

Public retirement benefits from other states were generally limited to the lesser of the private retirement maximum or the amount allowed as a deduction or exemption by the other state to its residents on benefits received from Michigan. Fourteen states allowed a full deduction or exemption for their residents receiving Michigan public retirement benefits, and, therefore, Michigan allowed a reciprocal full subtraction of public retirement benefits received from those states by Michigan residents, up to the private retirement maximum.

Under PA 38 and later amendatory Acts, the retirement subtraction for certain recipients became limited based on the taxpayer’s date of birth (or for joint filers, the date of birth of the older spouse) and separated taxpayers into three age-based tiers (See section 30(9)). In addition, a standard deduction became available to certain taxpayers, and retirees from government agencies not covered by the Federal Social Security Act were offered treatment comparable to covered retirees. Generally, these changes were effective beginning with tax year 2012, as described below.

Note: In some cases, these provisions require taxpayers to choose between one set of subtractions or another. Michigan forms use a shortcut method to effectively ensure the lowest taxable income for filers calculating between the options. The forms automatically apply the standard deduction, discussed below, when that amount exceeds the sum of certain other subtractions. The taxpayer reports as though they are still claiming those certain other subtractions and a remaining amount, or “residual standard deduction,” is calculated and reported, if applicable. The explanations in this RAB generally reflect the forms shortcut method.

Tier 1 (MCL 206.30(9)(a)): Taxpayers born before 1946 were not subject to any limitations on retirement income deductions other than those in place under prior law, meaning the subtraction for retirees in this tier remained unlimited for all retirement benefits received from Michigan or federal public sources; the subtraction for public retirement benefits received from another state’s state or local government continued to be subject to the lower of the inflation-indexed private retirement maximum or the amount allowed by the other state to its residents on Michigan-earned retirement income; and retirement benefits received from private sources were subject to the inflation-indexed private retirement maximum, which for tax year 2025 is$65,897 for a single filer and $131,794 for joint filers. The private retirement maximum was still required to be reduced by any public retirement subtraction and any amounts subtracted for taxable railroad retirement benefits or for military retirement benefits due to service in the U.S. Armed Forces or Michigan National Guard.

Tier 2 (MCL 206.30(9)(b)-(c)): For taxpayers born in 1946 through 1952, the maximum retirement income deduction was $20,000 for a single filer or $40,000 for joint filers, reduced by any amounts claimed for taxable railroad retirement benefits or for military retirement benefits due to service in the U.S. Armed Forces or Michigan National Guard. At age 67, the $20,000/$40,000 deduction was no longer restricted to retirement income, but could be applied to all income, and was therefore referred to as the standard deduction . However, that $20,000/$40,000 standard deduction was reduced by any deductions claimed for taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard.

For taxpayers born 1946-1952 who received retirement income from a governmental agency that was not covered by the federal Social Security Act, the “uncovered” taxpayer could deduct retirement benefits up to $35,000 on a single return and $55,000 on a joint return (or $70,000 on a joint return if both spouses were “uncovered”). After that taxpayer reached age 67, this deduction was available against all income. The maximum deduction had to be reduced by any deductions claimed for taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard.

Tier 3 (MCL 206.30(9)(c)-(e)): For taxpayers born after 1952, generally there was no retirement income deduction; however, upon reaching age 67, taxpayers in this tier were eligible for the $20,000/$40,000 standard deduction against all income. Their standard deduction was reduced by the personal exemption and any deductions claimed for taxable Social Security, taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard. For tax years 2026 through 2028, see 2025 PA 24 and Issue 11 in this RAB.

Special rules applied for “uncovered” individuals born after 1952, depending on when they retired. Those rules applied as follows:

“Uncovered” individuals age 62 through 66 who were retired as of January 1, 2013, could deduct retirement or pension benefits up to $35,000 for a single return, $55,000 for a joint return, or $70,000 for a joint return if both individuals were “uncovered”. For some taxpayers, the retirement subtraction may have been reduced by amounts deducted for taxable railroad retirement benefits or retirement benefits due to service in U.S. Armed Forces or Michigan National Guard.

Once these individuals reached age 67, they could deduct up to $35,000 for a single return, $55,000 for a joint return, or $70,000 for a joint return if both individuals were “uncovered”, against all income. However, those “uncovered” standard deduction amounts were reduced by amounts deducted for taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard.

“Uncovered” individuals who were not retired as of January 1, 2013, and had not reached the age of 67 could deduct retirement or pension benefits up to $15,000 for a single return, $15,000 for a joint return, or $30,000 if both spouses were “uncovered”. For some taxpayers, the retirement subtraction may have been reduced by amounts deducted for taxable railroad retirement benefits or retirement benefits due to service in U.S. Armed Forces or Michigan National Guard.

Once these individuals reached age 67, they could claim the $20,000/$40,000 standard deduction against all income, reduced by the personal exemption and any deductions claimed for taxable Social Security, taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard. For tax years 2026 through 2028, see 2025 PA 24 and Issue 11 in this RAB.

Special rules applied for determining the tier limitation applicable to surviving spouses. A surviving spouse could compute the subtraction based on the date of birth of an older deceased spouse as long as a retirement or Social Security income subtraction had been claimed on a joint return for the tax year in which the spouse died and as long as the surviving spouse had not since remarried. Beginning in 2020, a surviving spouse born after 1945 who had reached the age of 67 and had not remarried could elect to take the greater of the standard deduction against all types of income or the retirement income deduction based on the date of birth of the older deceased spouse. MCL 206.30(9)(f).

PA 4 of 2023, the Lowering MI Costs Plan, was signed into Michigan law on March 7, 2023, and amended section 30 of the MITA, MCL 206.30, to phase out (roll back) the 3-tier system of limitations and restrictions placed on the retirement subtraction since 2012. PA 4 also created two new subsections, 30(10) and (11). These statutory amendments made the provisions of subsections 30(9), (10), and (11) elective, allowing taxpayers to choose the maximum deduction available under those provisions. In addition, PA 24 of 2025, effective October 7, 2025, amended subsection 30(9) to temporarily expand the standard deduction with respect to the Social Security income deduction. The following questions and answers provide a discussion that describes the subtraction for retirement or pension benefits and the standard deduction under PAs 4 and 24.

Answer. PA 4 applies beginning with the 2023 tax year.

Answer. For most individuals, limits on the subtraction of retirement income that are based on year of birth and age in the tax year are rolled back over a four-year period beginning in 2023 (in other words, retirement income taxation is reduced over a phase-in period). Special rules apply to certain public safety officers and employees.

PA 4 added two new subsections within section 30 of the MITA, subsections (10) and (11). Over a four-year period beginning in 2023, subsection (10) phases out the deduction limits previously implemented in 2012. Subsection (10) maximums are subject to the limitations in subsection (1)(f)(iv) and must, therefore, be reduced by any public, military, Michigan National Guard, and railroad retirement deductions. The impact of subsection (10) of PA 4 on the various age groups is summarized below:

PA 4 does not impact taxpayers born before 1946 (Tier 1 taxpayers under PA 38). The retirement subtraction for these retirees continues to be unlimited for all retirement or pension benefits received from public sources. These retirees must still reduce the maximum allowable subtraction for any private retirement benefits by any public retirement benefit subtraction. Public retirement benefits in this context refers to retirement or pension benefits issued by any of the following: the federal government, including benefits paid by the Railroad Retirement Board; the State of Michigan; political subdivisions, agencies, or instrumentalities of Michigan; the Armed Forces; or the Michigan National Guard. Compensation from the Armed Forces is also fully deductible and must reduce the maximum allowable subtraction for private retirement benefits.

PA 4 does not limit the availability of the standard deduction for taxpayers who qualified under the law before PA 4. For example, certain taxpayers with little or no retirement or pension benefits may still maximize the available deductions by taking the standard deduction. See the “ Post-2011 Michigan Tax Treatment of Retirement Distributions ” section in this RAB for more information.

Tax Year 2023 – taxpayers born after 1945 and before 1959 may deduct combined public and private retirement benefits not to exceed 25% of the inflation-adjusted private retirement maximum under subsection (1)(f)(iv) of section 30 of the MITA. For 2023, this maximum is $61,518 for single and married filing separate filers and $123,036 for joint filers, 25% of which is $15,380 and $30,759, respectively.

Tax Year 2024 – taxpayers born after 1945 and before 1963 may deduct combined public and private retirement benefits not to exceed 50% of the inflation-adjusted private retirement maximum under subsection (1)(f)(iv) of section 30 of the MITA. For 2024, this maximum is $64,040 for single and married filing separate filers and $128,080 for joint filers, 50% of which is $32,020 and $64,040, respectively.

Tax Year 2025 – taxpayers born after 1945 and before 1967 may deduct combined public and private retirement benefits not to exceed 75% of the inflation-adjusted private retirement maximum under subsection (1)(f)(iv) of section 30 of the MITA. For 2025, this maximum is $65,897 for single and married filing separate filers and $131,794 for joint filers, 75% of which is $49,423 and $98,846, respectively.

Tax year 2026 and each year thereafter – regardless of year of birth, taxpayers may deduct combined public and private retirement benefits up to the inflation-adjusted private retirement maximum under subsection (1)(f)(iv) of section 30 of the MITA. The inflation-adjusted maximum does not apply to the public retirement benefits of taxpayers born before 1946.

If a subtraction using the limitations above or a subtraction for Social Security income is claimed on a joint return for the year a spouse died and the surviving spouse has not yet remarried, the surviving spouse may use the phaseout method based on the older deceased spouse’s year of birth and subject to the limitations applicable to a single-filer return.

PA 4 also added subsection (11) to section 30 of the MITA, carving out a population of taxpayers who are not subject to the four-year phase-in of their deduction. For those retirees, beginning in tax year 2023, subsection (11) instead restores a full deduction of any public retirement benefits, to the extent a qualifying distribution is included in AGI. However, any public retirement benefits deduction claimed reduces the maximum private retirement benefits deduction. This subsection applies to recipients of retirement or pension benefits for services in Michigan as an employee of a public police or fire department, a state police trooper, a state police sergeant, or a corrections officer employed by a county sheriff in a county jail, work camp, or other facility maintained by a county that houses adult prisoners (see Issue 5). As a shorthand only, this RAB may refer to this class of service providers as “ public safety personnel ” or to the deduction as the “ public safety deduction .”

The provisions of subsections (10) and (11) of Section 30 of the MITA are elective. MCL 206.30(10) and (11). Taxpayers may choose the maximum deduction available under either provision, if applicable, or under subsection (9) (the tiered provisions and standard deduction that went into effect in 2012 under 2011 PA 38 and later amendatory acts).

Note: Where examples in this post-2011 section of the RAB involve both the standard deduction and taxable Social Security income, calculations may differ for tax years 2026 through 2028. See Issue 11.

Example A : Taxpayer Adam is the older spouse of a married couple filing jointly. He was born in 1956 and is 67 years old in tax year 2023. He and his spouse have retirement income of $40,000, taxable Social Security income of $12,000, and other income of $2,000, for AGI of $54,000.

Based on Adam’s age, the taxpayers fall into Tier 3. Under subsection (9), Tier 3 taxpayers are allowed no retirement income deduction. But because Adam, the older spouse, is 67, under subsection (9), the couple may choose to apply either the standard deduction of $40,000 against all income (in which case they cannot take a subtraction for taxable Social Security income or for personal exemptions) ($54,000 - $40,000 = $14,000) or they may forgo the standard deduction in favor of deducting taxable Social Security income and the personal exemption ($54,000 - $12,000 - $10,800 = $22,800). The standard deduction results in lower Michigan taxable income ($14,000 < $22,800).

Note: Michigan forms use a shortcut method to effectively ensure the lowest taxable income for filers calculating between these two subsection (9) options. The computation on the forms will automatically apply the standard deduction when that amount exceeds the sum of the taxpayer’s Social Security income and personal exemption subtractions. The taxpayer reports as though they are claiming Social Security income and the personal exemption, and a remaining amount, or “residual standard deduction,” is calculated and reported. Their Michigan taxable income would be calculated on forms as follows:

Amount Description $54,000 AGI - $10,800 Personal Exemption - $12,000 Taxable Social Security Income - $17,200 Residual Michigan Standard Deduction: (40,000 – 10,800 – 12,000) $14,000 Michigan Taxable Income

Alternatively, under subsection (10), for tax year 2023, Adam and his spouse may forgo the $40,000 standard deduction and instead deduct retirement income up to 25% of the private retirement maximum of $123,036, or $30,759 (.25 x $123,036). Therefore, the couple may subtract $30,759 of their $40,000 retirement income, plus 100% of taxable Social Security income and their personal exemptions.

The couple’s subtraction of $30,759 under subsection (10), plus the availability of their subtraction for Social Security income and personal exemptions ($30,759 + $12,000 + $10,800 = $53,559), is higher than their standard deduction of $40,000 under subsection (9). The retirement deduction option under subsection (10) would, therefore, be the more advantageous choice. Their Michigan return would appear as follows:

Amount Description $54,000 AGI - $30,759 2023 Joint phase-in deduction - $12,000 Taxable Social Security Income - $10,800 Personal Exemption $441 Michigan Taxable Income

Example B : Same facts as in Example A except Adam and his spouse had retirement income of $25,000, taxable Social Security income of $2,000, and other income of $15,000 for a total AGI of $42,000. The taxpayers are still Tier 3 taxpayers and are allowed no retirement income subtraction under subsection (9). But they may take a standard deduction of $40,000 against all income in computing Michigan taxable income (in which case they cannot take a subtraction for taxable Social Security income or for personal exemptions) ($42,000 - $40,000 = $2,000) or they may forgo the standard deduction in favor of subtracting taxable Social Security income and the personal exemption ($42,000 - $2,000 - $10,800 = $29,200). The standard deduction results in lower Michigan taxable income. Their Michigan taxable income would be calculated as follows:

Amount Description $42,000 AGI - $10,800 Personal Exemption - $2,000 Taxable Social Security Income - $27,200 Residual Michigan Standard Deduction* ($40,000 - $10,800 - $2,000) $2,000 Michigan Taxable Income

* The Michigan returns use the shortcut method explained in example A.

Alternatively, under subsection (10), for tax year 2023, Adam and his spouse may forgo the standard deduction and instead deduct retirement income up to 25% of the private retirement maximum of $123,036, or $30,759 (.25 x $123,036), plus their Social Security income and the personal exemptions.

Amount Description $42,000 AGI - $2,000 Taxable Social Security Income - $25,000 2023 Joint phase-in deduction - $10,800 Personal Exemption $4,200 Michigan Taxable Income

Since the couple’s phase-in retirement subtraction of $25,000 under subsection (10), plus the availability of their subtraction for Social Security income and personal exemptions ($25,000 + $2,000+ $10,800 = $37,800), is less than their $40,000 standard deduction, the option under subsection (9) is the more advantageous choice.

Answer: Yes, with one exception. Prior to 2012, retirement income from federal and Michigan sources, including political subdivisions of Michigan, was totally exempt. Under PA 4, for the final phase-in year of 2026, and each tax year thereafter, subtractions of retirement income from these public sources are limited to the private retirement maximum under subsection 30(1)(f)(iv) of the MITA (except for taxpayers born before 1946, for whom retirement subtractions of public benefits remain unlimited). In applying the private retirement maximum, a taxpayer must combine all deductible public retirement income, whether it is federal, Michigan, or from another state government with a similar or reciprocal deduction, and any private retirement income and then apply the limitation to the combined amounts. See MCL 206.30(10)(d).

Example C : In tax year 2026, taxpayer Jamie, who was born after 1945, had the following income: Michigan public pension of $45,000, federal public pension of $26,000, federal taxable Social Security income of $12,000 and other income of $4,500 for AGI of $87,500. Jamie’s combined public pensions are $71,000. He may deduct his full retirement benefits up to the inflation-adjusted limit for private retirement benefits. For this example, assuming no inflation adjustments were made from 2023 to 2026, the maximum deduction is $61,518. Jamie can only deduct $61,518 of his $71,000 pension income.

Answer: Yes. As with private retirement or pension benefits under subsection (9), the subsection (10) maximums are subject to the limitations in subsection (1)(f)(iv).

Before the enactment of PA 4, and regardless of which tier of subsection (9) the taxpayer fell into based on date of birth, the maximum amounts allowed for private retirement benefits had to be reduced by the sum of all deductions the taxpayer claimed for military compensation, including retirement or pension benefits, railroad retirement benefits, Michigan National Guard benefits, and federal and Michigan public retirement benefits. See MCL 206.30(1)(f)(iv).

Under the subsection (10) rollback of the subsection (9) limitations, for each phase, the taxpayer computes a percentage of the maximum amount of retirement benefits that the taxpayer “would be allowed to deduct for the tax year under subsection 30(1)(f)(iv) if the taxpayer’s retirement or pension benefits were subject to the limitations of that subsection only.” MCL 206.30(10)(a)-(c). In other words, regardless of the source of the taxpayer’s retirement or pension benefits, the taxpayer treats those benefits as if they were subject to the limitations applicable to private retirement or pension benefits under subsection 30(1)(f)(iv). Thus, a taxpayer electing the subsection (10) deduction must reduce the maximum amount allowed for that deduction by the sum of all deductions taken for the following: taxable military compensation, including pension or retirement benefits, railroad retirement benefits, and Michigan National Guard retirement benefits. The taxpayer would then apply the applicable phaseout percentage, depending on the tax year.

Example D : For tax year 2023, Taxpayer Eve, born in 1958, had a military pension distribution of $40,000, a private retirement distribution of $12,000, and a $10,000 public retirement distribution. To calculate her private retirement limit, she must subtract the $40,000 military pension from the maximum private amount allowed ($61,518), leaving a private retirement maximum of $21,518. Eve may deduct her full military pension of $40,000 under subsection 30(1)(e) of the MITA. And under subsection 10(a), Eve may deduct 25% of $21,518 or $5,380 of her combined $22,000 in public and private retirement benefits.

Answer: The statute defines 3 categories of law enforcement retirees eligible for the subsection 30(11) deduction: (1) public police or fire department employees subject to 1969 PA 312, MCL 423.231 to 423.247 (the Compulsory Arbitration of Labor Disputes in Police and Fire Departments Act); (2) state police troopers or state police sergeants subject to 1980 PA 17, MCL 423.271 to 423.287 (the Compulsory Arbitration of Labor Disputes of State Police Troopers and Sergeants Act); and (3) corrections officers employed by a county sheriff in a county jail, work camp, or other facility maintained by a county that houses adult prisoners. Retirees must receive retirement benefits for services as one of the following:

(1) Public police or fire department employees. Section 30(11) applies to a person with benefits received for services as “ a public police or fire department employee subject to 1969 PA 312, MCL 423.231 to 423.247 [the Compulsory Arbitration of Labor Disputes in Police and Fire Departments Act].” As referenced, the Compulsory Arbitration of Labor Disputes in Police and Fire Departments Act generally requires the labor disputes of certain police and fire department employees to be subject to mandatory arbitration. The Act only applies to a “public police or fire department employee,” which Section 2(1)(d) of the Act, MCL 432.232(1)(d), defines, in pertinent part, as:

[A]ny employee of a city, county, village, township, or institution of higher education, or of any authority, district, board, or any other entity created in whole or in part by the authorization of 1 or more cities, counties, villages, townships, or institutions of higher education, whether created by statute, ordinance, contract, resolution, delegation, or any other mechanism, who is engaged as a police officer or in firefighting or who is subject to the hazards thereof; a corrections officer employed by a county sheriff in a county jail, work camp, or other facility maintained by a county and that houses adult prisoners; emergency medical service personnel employed by a public police or fire department; or an emergency telephone operator, but only if directly employed by a public police or fire department.

By referring to a “public police or fire department employee” subject to the Compulsory Arbitration of Labor Disputes in Police and Fire Departments Act, Section 30(11) expressly incorporates the requirements of that Act. As a result, public police and fire department employees eligible for the benefit under Section 30(11) include the following:

Police officers or firefighters employed by a city, county, village, township, or institution of higher education;

County corrections officers (see below for additional information);

Emergency medical service personnel employed by a public police or fire department;

Emergency telephone operators, but only if directly employed by a public police or fire department. [MCL 432.232(1)(d)].

Certain public employees are not eligible under Section 30(11). This includes support staff, administrative staff, and other non-emergency personnel who work within a police or fire department but are not subject to compulsory arbitration under 1969 PA 312. This also includes Huron-Clinton Metropark employees, and emergency telephone operators employed by a 911 authority or consolidated dispatch center. MCL 432.232(1)(d)(i)-(ii). Likewise, law enforcement retirees who worked outside Michigan during their careers were not subject to Michigan laws requiring compulsory arbitration of labor disputes and are therefore not eligible under Section 30(11).

(2) State Troopers or Sergeants. Section 30(11) refers to a person with benefits received for services as a “state police trooper or state police sergeant subject to 1980 PA 17, MCL 423.271 to 423.287 [the Compulsory Arbitration of Labor Disputes of State Police Troopers and Sergeants Act].” As referenced, the Compulsory Arbitration of Labor Disputes of State Police Troopers and Sergeants Act only applies to Michigan State Police (MSP) employees with the rank of trooper or sergeant. MCL 423.272(2). The Act does not apply to MSP employees at higher ranks, including the ranks of lieutenant, inspector, captain, major, lieutenant colonel, or colonel. MCL 28.8. Eligibility under Section 30(11) is therefore limited to MSP retirees that receive benefits for services at the rank of trooper or sergeant.

Frequently, an MSP employee may work as a trooper or sergeant before being promoted to higher ranks. Even though these higher ranks are not eligible under Section 30(11), the benefits received by that employee upon retirement include some portion of benefits for services performed at the rank of trooper or sergeant. Because in this case the retiree received benefits for services as a state police trooper or sergeant, that retiree qualifies under Section 30(11). In other words, MSP employees who serve as a trooper or sergeant before rising to a higher rank will remain eligible under Section 30(11), and an individual’s rank at the time of retirement is not determinative of eligibility under Section 30(11).

(3) County Corrections Officers. Section 30(11) refers to a person with benefits received for services as a “corrections officer employed by a county sheriff in a county jail, work camp, or other facility maintained by a county that houses adult prisoners.” Even though “corrections officer” is not specifically defined within Section 30(11), its meaning is understood by context based on the laws that regulate corrections officers working in Michigan counties. Indeed, any “local corrections officer” that is employed by a Michigan county sheriff in a “local correctional facility” is subject to the Local Corrections Officer Training Act, MCL 791.531 et seq. , which establishes certain educational, training, and certification requirements applicable to local corrections officers. For this purpose, a “local corrections officer” is defined as “any person employed by a county officer in a local correctional facility as a corrections officer or that person’s supervisor or administrator.” MCL 791.532(e). A “local correctional facility” is defined as a “county jail, work camp, or any other facility maintained by a county that houses adult prisoners.” MCL 791.532(d). Within this context, a “corrections officer employed by a county sheriff in a county jail, work camp, or other facility maintained by a county that houses adult prisoners” effectively describes those persons certified to work as a local corrections officer under the Local Corrections Officer Training Act. As a result, the deduction under Section 30(11) is available only for retired corrections officers who were certified as such under the Local Corrections Officer Training Act.

Limited in this way, not all corrections staff will qualify under Section 30(11). For example, certain staff that work within a local correctional facility – such as administrative staff or support staff – are not required to be certified as corrections officers and, therefore, do not qualify for Section 30(11). Likewise, state corrections officers are not generally subject to the Local Corrections Officer Training Act and are not eligible under Section 30(11). Additionally, other county employees who are not specifically required to be certified as correctional officers in their job duties, such as a probate officer or pretrial officer, are also not eligible under Section 30(11).

Answer: Yes, benefits received exclusively for service as a federal law enforcement officer will generally qualify for the unlimited public retirement income deduction authorized under subsection 30(11). Before PA 4, federal retirement benefits were deductible under 30(1)(f)(i) but were subject to the limitations and restrictions in subsection 30(9).

Though the language of subsection 30(11) limits that benefit to certain retired state and local law enforcement and public safety employees, the intergovernmental tax immunity doctrine applies and allows federal law enforcement and public safety employees with retirement income to qualify for the unlimited deduction of public retirement income.

The intergovernmental tax immunity doctrine is codified in a federal statute, 4 USC §111, in which the United States Congress consented to state taxation of federal employees as long as the tax did not discriminate against federal employees on the basis of the source of the employees’ compensation. The United States Supreme Court has interpreted the doctrine to bar unequal tax treatment of similarly situated federal and state employees. See Davis v Mich Dep’t of Treasury , 489 US 803, 813 (1989), and Dawson v Steager, W Va State Tax Comm’r , 139 S Ct 698 (2019).

There are no substantive differences between law enforcement retirees described in subsection (11) and those federal retirees who worked in substantially similar federal jobs. Therefore, under the intergovernmental tax immunity doctrine, federal retirees receiving retirement income from work earned in jobs similar to state and local public police or fire department employees, state troopers or police sergeants, or corrections officers working in facilities managing adult prisoners, will qualify for the subsection (11) retirement income deduction.

Answer: The subtraction is not limited to the retirement income received for the services covered in subsection (11). The retirement income subtraction available under subsection (11) is available to any taxpayer with retirement or pension benefits received for services performed by the described public safety personnel. And it allows those taxpayers to “elect to deduct retirement or pension benefits as provided under subsection (1)(f) without any additional limitations or restrictions . . .” Subsection (1)(f) broadly references the types of benefits that may be deducted. As to retirement or pension benefits, this includes (1) those received from a federal or state public retirement system or from a political subdivision of this state, (2) those received from a public retirement system of another state if that state’s income tax laws similarly treat retirement or pension benefits from Michigan or its political subdivisions, up to the private retirement or pension benefit maximum, or (3) those received from any other retirement or pension system, or from a retirement annuity policy payable to a senior citizen for life, up to the private retirement or pension benefit maximum. Therefore, if a taxpayer receives a retirement or pension benefit for services performed by public safety personnel eligible under subsection (11), that taxpayer may also deduct any of the other categories of retirement or pension benefits under subsection (1)(f) with the only limitation being the private retirement or pension maximum as determined under (1)(f)(iv). As is the case for some other taxpayers with both public and private benefits deductible under subsection (1)(f), the limitation available for private benefits is reduced by any public benefits deducted.

Example E . In tax year 2024, taxpayer Jose, a retired state police trooper, had a Michigan public pension of $57,700. His spouse, Chris, age 65, had private retirement income of $30,400 and $43,000 in income from a retirement annuity policy. Jose and Chris will file a joint return for 2024. Both Jose’s and Chris’ retirement income is potentially deductible in tax year 2024 because they are taxpayers “with retirement or pension benefits received for services as a state police trooper.” The couple will deduct all $57,700 of Jose’s public benefits without limitation. Chris’ private retirement income is limited by the private retirement maximum for a joint return as determined under subsection (1)(f)(iv). Subsection (1)(f)(iv) requires that the private retirement maximum be reduced by the public pension benefits deducted by the couple. The private retirement maximum is computed as $128,080 reduced by the $57,700 of deductible public pension, or $70,380. Chris’ total private retirement benefits of $73,400 exceed the adjusted private retirement maximum. The couple may, therefore, deduct up to $70,380 of Chris’ private benefits, with the remaining amount, $3,020, reported as taxable on their joint return.

Example F. Taxpayer Kevin works as a local police officer and qualifies for an unlimited public retirement deduction under subsection (11). As part of a divorce between Kevin and his wife, Robin, an Eligible Domestic Relations Order (EDRO) is used to assign to Robin a portion of the retirement benefits that Kevin will receive upon retirement. See MCL 38.1701 et seq . The EDRO directs the retirement plan administrator to pay out a certain percentage of the retirement benefits upon Kevin’s retirement. In tax year 2026, Kevin retires and begins to receive retirement distributions. Based on the EDRO, a portion of the distributions are paid directly to Robin. Both Kevin and Robin are receiving retirement benefits that were earned from service as a qualifying local police officer; therefore, both will qualify for the unlimited public retirement deduction provided under subsection (11).

Answer: Yes, the recipient’s public benefits rolled into the IRA would get the same treatment coming out of the IRA as they did prior to the rollover and would be fully deductible. However, any distributions from the IRA that are attributable to contributions made directly into the IRA, a rollover from a qualifying private retirement benefit source, and any earnings would be treated as private benefits and subject to the private benefits deduction limits. This is true regardless of the type of IRA into which those funds were converted (i.e., traditional or Roth). The tax-deductible character of the original retirement plan survives the rollover. See Magen v Mich Dep’t of Treasury , 299 Mich App 566 (2013), RAB 2017-21, and RAB 2017-25.

Taxpayers that claim a subtraction based upon the result in Magen may be required to submit all relevant account documentation establishing the source, timing, and amount of the rollover, and a statement of any post-rollover contributions and accrued earnings.

Answer: Yes, if the surviving spouse meets the qualifying conditions. Exceptions to these conditions apply for certain surviving spouses, as described below.

For purposes of subsections 30(9)(f) and 30(10)(e) of the MITA, a surviving spouse may compute a retirement subtraction based on the date of birth of the older, deceased spouse if all the following conditions are true:

A joint return was filed for the tax year in which the spouse died,

A retirement subtraction or taxable Social Security income subtraction was claimed for the year in which the spouse died, and

The surviving spouse has not since remarried. [See RAB 2021-24, The Retirement and Pension Benefits Deduction for a Surviving Spouse .]

A surviving spouse born after 1945 who has reached the age of 67 and has not remarried may elect to take the greater of the Michigan standard deduction or the allowable retirement subtraction based on the date of birth of the older, deceased spouse.

To subtract benefits earned by a deceased spouse, the surviving spouse of a subsection (11) retiree is not required to have taken a retirement or Social Security income subtraction on a joint return in the year in which the spouse died. Moreover, because the subtraction is based on the source of the recipient’s benefits rather than age, the age of the older spouse is not a factor in computing the subtraction. In addition, if the surviving spouse of a subsection (11) retiree has remarried, that surviving spouse is still eligible to deduct retirement and pension benefits under subsection (11).

Answer : No, if a surviving spouse meets certain conditions described below, the surviving spouse is entitled under subsection 30(10) to claim any of the subtractions under subsection 30(1)(f), subject to the same restrictions and limitations, for a single return, that would have applied based on the date of birth of the older of the two spouses. The subtractions under 30(1)(f) are as follows:

1. Public retirement or pension benefits from federal, Michigan, or local sources.

2. Public retirement or pension benefits from another state or its political subdivisions if the other state permits similar or reciprocal treatment.

3. Social Security benefits.

4. Private retirement or pension benefits, subject to the private retirement maximums.

To claim any combination of these deductions, the surviving spouse must (1) have claimed a deduction under any of the subparagraphs of 30(1)(f) on a joint return for the tax year in which their spouse died and (2) not have remarried. Thus, a taxpayer is not limited to the particular subparagraph(s) of 30(1)(f) claimed on the joint return in the year of the decedent spouse’s death.

Example G . Taxpayer Callie, born in 1960, files a joint return for tax year 2022 on behalf of herself and her recently deceased spouse, Weston, born in 1957. On the return, the couple claims a subtraction for Social Security benefits under subsection 30(1)(f)(iii). In tax year 2023, Callie receives both a private and a public retirement benefit in addition to her Social Security benefit. Even though in prior years neither spouse would have had a retirement deduction because they were both Tier 3 taxpayers (born after 1952), in tax year 2023, Callie can deduct 25% of the private maximum retirement benefit amount because her deceased spouse was born after 1945 and before 1959 (the criteria for a subsection (10) deduction for tax year 2023). She is not limited to the particular type of deduction claimed under 30(1)(f) on the joint return in the year of her spouse’s death.

Example H . Taxpayer Jo, born in 1955, files a joint return for tax year 2022 on behalf of herself and her recently deceased spouse, Ken, born in 1945. On the return, the couple claims a subtraction for Social Security benefits under subsection 30(1)(f)(iii). In tax year 2023, Jo received $50,000 of qualifying public retirement benefits. Jo is eligible based on the year of birth of her older, deceased spouse, to choose a retirement deduction under subsection (9)—specifically, for a Tier 1 retiree under subdivision (a)—and claim a subtraction for all public retirement benefits; therefore, Jo can deduct $50,000. Alternatively, Jo could have taken a subtraction under subsection (10)(a) using her own birth year, which would be limited to $15,380 (25% of $61,518); however, her deduction under subsection (9) is greater.

Despite the additions of subsections 30(10) and (11) under PA 4, taxpayers with little or no retirement or pension income may still benefit most from electing to claim a standard deduction under subsection 30(9). 2025 PA 24 amended subsection 30(9) to temporarily expand the Social Security income deduction for certain taxpayers eligible to claim the standard deduction. Specifically, for taxpayers born after 1952 who reach the age of 67, the following rules apply:

For tax years 2026 through 2028, these taxpayers who have Social Security income included in AGI may subtract both the Social Security income and a full standard deduction. However, their standard deduction must still be reduced by the personal exemption and any deductions claimed for taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard.

For tax years prior to 2026 and after 2028, their standard deduction must be reduced by the personal exemption and any deductions claimed for taxable Social Security, taxable railroad retirement benefits, compensation (including retirement benefits) due to service in the U.S. Armed Forces, or retirement benefits due to service in the Michigan National Guard.

As with the standard deduction prior to PA 24, a couple filing a joint return may use the year of birth and age of the living, older spouse to determine eligibility for the standard deduction.

Example I. Claude is a working, single taxpayer who is 71 years old in 2025 and was born in 1954. Claude did not serve in the U.S. Armed Forces or Michigan National Guard and had the following income for tax year 2025 :

$18,000 wages

$ 5,000 retirement and pension benefits

$12,000 Social Security income

$35,000 total income in AGI.

Claude can deduct his Social Security income under subsection 30(1)(f)(iii). If Claude were to take a deduction for retirement and pension benefits under subsection 30(10), he could be eligible to deduct up to $49,423; however, he only has $5,000 in qualifying benefits and therefore may benefit more from taking a $20,000 standard deduction under subsection (9)(e). If he takes the standard deduction in 2025, Claude is required to reduce the $20,000 by the amount he deducts for his personal exemption ($5,800 for 2025) and Social Security income. Claude would evaluate his options as follows:

$35,000 AGI

Less: $5,800 personal exemption

Less: $12,000 Social Security income

Less: $2,200 residual standard deduction

Equals: $15,000 taxable income

$35,000 AGI

Less: $5,800 personal exemption

Less: $12,000 Social Security income

Less: $5,000 retirement benefits

Equals: $12,200 taxable income

Example J. Assume Claude has the same income in 2026 as he did in Example I and that the personal exemption amount remains the same. Because of PA 24, Claude does not have to reduce his 2026 standard deduction by his Social Security subtraction. Claude would evaluate his options as follows:

$35,000 AGI

Less: $5,800 personal exemption

Less: $12,000 Social Security income

Less: $14,200 residual standard deduction

Equals: $3,000 taxable income

$12,200 taxable income (same as it would have been for tax year 2025)