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us-mi/guidance/treasury/rab/2026-1 — Revenue Administrative Bulletin 2026-1 · Axiom
Axiom
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Michigan
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Guidance
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Treasury
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Rab
Revenue Administrative Bulletin 2026-1
22 sections
Individual Income Tax – Treatment of Retirement Income Under Public Act 4 of 2023
Introduction
What Are Qualifying Retirement and Pension Benefits?
Pre-2012 Michigan Tax Treatment of Retirement Distributions
Post-2011 Michigan Tax Treatment of Retirement Distributions
Treatment of Retirement Income under PA 4
Issue 1. What is the first tax year to which PA 4 applies?
Issue 2. What changes to deduction limits on retirement benefits did PA 4 make?
Issue 3. Is the treatment of retirement income under 2023 PA 4, once fully phased in beginning in 2026, a return to the pre-2012 treatment?
Issue 4. Under the new subsection (10) phaseout of deduction limitations of PA 4, must a taxpayer reduce the maximum retirement benefits deduction by any military, Michigan National Guard, and railroad retirement deductions?
Issue 5. Who is permitted to deduct public benefits without limitation under subsection (11) of Section 30?
Issue 6. Are retirement benefits received from the Federal Employees Retirement System (FERS) that are attributable to service as a federal law enforcement officer fully subtractable under subsection (11)?
Issue 7. Is the unlimited public retirement benefit subtraction available to recipients under subsection (11) limited to the retirement income received for the services described under that subsection or does it apply to other retirement or pension income received by the taxpayer as well?
Issue 8. If a recipient of a qualifying public retirement or pension distribution that is fully deductible under subsection (11) rolls that distribution into a private IRA, will subsequent distributions from the private IRA qualify for the same treatment under subsection (11)?
Issue 9. Do the special rules for surviving spouses apply under PA 4 to all available deduction options?
Issue 10. Consider a surviving spouse whose only deduction on a joint return in the tax year in which their spouse died was for Social Security benefits; is that surviving spouse limited under subsection 30(9) or 30(10) to claiming only a Social Security benefits deduction in succeeding years?
Issue 11 . What effect does 2025 PA 24 have on the taxation of Social Security income?
2. Calculate taxable income if claiming the standard deduction:
3. Calculate taxable income if claiming the retirement and pension benefits subtraction:
4. Compare results: $12,200 is less taxable income than $15,000; therefore, Claude takes the retirement subtraction .
2. Calculate taxable income if claiming the standard deduction:
3. Calculate taxable income if claiming the retirement and pension benefits subtraction:
