Social Security Taxation Changes in Public Act 24 of 2025

November 17, 2025

This Notice explains the recent changes within Public Act (PA) 24 of 2025 that will impact the retirement deduction of certain taxpayers who claim the standard deduction and receive social security.

Background

In Michigan, calculation of an individual’s income tax liability begins with the amount reported by the individual on their federal income tax return as adjusted gross income (AGI). For some taxpayers, AGI may include a portion of their social security (“SSA”) income. Michigan law allows taxpayers to deduct SSA income included in AGI that flows through to the Michigan return.

Michigan law also allows a deduction for qualified retirement and pension benefits, subject to certain limitations. For taxpayers who reach the age of 67, a “standard deduction” may be claimed in lieu of that retirement deduction. The standard deduction is applied to all types of income and is generally limited to $20,000 for single returns and $40,000 for joint returns. For anyone that claims the standard deduction, additional adjustments may apply depending on their year of birth. For anyone born after 1952, the taxpayer is required to offset the standard deduction by the personal exemption amount and — prior to 2025 PA 24 — the amount of the SSA deduction for that year.

Change Made by 2025 PA 24

PA 24 reverses the requirement to offset the standard deduction by the deduction taken for SSA income for taxpayers born after 1952 who have reached the age of 67. This reversal applies for tax years 2026 through 2028. The result is that these taxpayers may receive the benefit of both the standard deduction and the social security deduction in tax years 2026 through 2028.

Taxpayers Impacted by This Change

This change will only impact taxpayers born after 1952 who receive SSA income and claim the standard deduction on their Michigan individual income tax return. It does not impact taxpayers who do not claim the standard deduction on their return, such as taxpayers who elect to deduct their retirement and pension benefits. For information about choosing between the standard deduction and the retirement deduction, please visit Treasury’s retirement webpage, at https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/retirement-and-pension-benefits .

Example : Taxpayer Gina, a single woman, born March 5, 1953, is age 73 in tax year 2026. Gina earns $23,000 in wages, $5,000 in retirement income, and $12,000 in SSA income in 2026, resulting in total income of $40,000. Gina is eligible for the standard deduction of $20,000 because she has reached age 67. Prior to PA 24, Gina was required to offset the standard deduction by her SSA deduction ($20,000-$12,000), leaving her with $8,000 to apply against her other income of $28,000 and resulting in taxable income of $20,000. As a result of PA 24, Gina can take both the standard deduction of $20,000 and her SSA deduction of $12,000, resulting in taxable income of only $8,000.

Implementation

No other changes to the taxation of retirement income were enacted by PA 24.

Author:

Bureau of Tax Policy

PO Box 30828, Lansing, MI 48909

Treas_Tax_Policy@michigan.gov