Introduction

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.