Senate Votes to Repeal Retirement Tax

Liz Gullett

Jan 27, 2023

Michigan’s pension tax would see significant changes under legislation passed by the Senate this week. Introduced by Senator Kevin Hertel (D-St. Clair Shores), the bill would repeal changes enacted in 2011 when the state was facing a recession. Taxpayers would be eligible to deduct a percentage of retirement or pension benefits and social security benefits at a growing percentage each year. In its current form, the retirement tax would be fully phased out by the 2026 tax year. When the repeal reaches full implementation, General Fund revenue would be reduced by $500 million. However, that number could increase thereafter due to changing population demographics. The bill was referred to the House Tax Policy Committee for consideration.

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