Michigan Gov. Vetoes Pension Tax Repeal


A Michigan lawmaker this month introduced a bill to repeal the state’s tax on pension benefits. But Gov. Snyder immediately stopped the bill in its tracks by saying he would veto it if it ever came to his desk.

It’s unclear how much support the bill had among lawmakers.

More details from Wood Radio:

House Republican Tom Barrett of Potterville said it’s fundamentally unfair to tax retirees in a way they couldn’t anticipate throughout their working careers. Barrett also said that a person would have an overall loss in funds and in some cases, people who retired and began collecting pensions before the tax was created would be affected as well.

Snyder who signed the pension tax law in 2011 said after his re-election last year that he had no plans to repeal the tax. Snyder said that the law actually helped create a fairer system and helped working seniors, giving a tax exclusion of up to $40,000 for a married couple.

Taxpayers born before 1946 are exempt from the pension tax. But everyone else has to pay it, although there are various levels of exemption.

For example, taxpayers born between 1946 and 1952 are eligible for the following exemptions, according to Kiplinger:

Public and private pension income is exempt up to $20,000 (single filers) or $40,000 (joint filers). Once these taxpayers turn 67 years old, the deduction for pension/retirement benefits is replaced by a standard deduction against all income of $20,000 (single) or $40,000 (joint). The standard deduction is reduced by any deductions taken for military retirement benefits or Railroad Retirement income. Beginning in 2013, retirees with pension benefits from employment with a government entity that was exempt from the Social Security Act have higher deduction limits.

Read Kiplinger’s guide to Michigan taxes for retirees here.


Photo by 401kcalculator.org

Share This Post

Related Articles

Powered by WordPress · Designed by Theme Junkie
Facebook IconTwitter Icon