Michigan retirement taxes in 2026: what retirees pay

Michigan taxes income at one flat rate, but for many retirees that rate touches less of their money than they'd expect. Social Security isn't taxed here at all. On top of that, the state exempts retirement income up to a set limit. The limit is higher on a joint return than on a single one, and it rises each year. One detail matters for anyone retiring early: IRA withdrawals taken before age fifty-nine and a half don't qualify for the exemption. So the age you start drawing from those accounts shapes what Michigan ends up taxing.

Michigan retirement taxes at a glance (2026)

Michigan's income tax rate for 2026

Michigan taxes income at a flat 4.25% 1.

How Michigan treats retirement income

Michigan exempts retirement income up to $65,897 on a single return and $131,794 on a joint return (the 2025 limits; they rise each year). IRA withdrawals before 59½ do not qualify. 2

What three retirees would pay in Michigan

These are estimates from Monte Climb's planner on 2026 law, for three example households. They start, as the app does, from federal taxable income: the 2026 standard deduction plus the extra amount at 65 3, the taxable part of Social Security 4 and the senior deduction 5. Those federal deductions are already taken off, and most states allow less of their own, so Michigan's real bill can be higher than shown.

• A single retiree, 67 with $54,000 of income would owe about $0 to Michigan, after $30,000 of retirement income is excluded and $11,300 of taxable Social Security is left out.
• A married couple, both 67 with $106,000 of income would owe about $0 to Michigan, after $60,000 of retirement income is excluded and $35,700 of taxable Social Security is left out.
• A married couple, both 62, before Social Security with $76,000 of income would owe about $0 to Michigan, after $70,000 of retirement income is excluded.

The same couple next door

The married couple, both 67, with $106,000 of income, in Michigan and the states around it:

Every figure here starts from federal taxable income, as above, so a state whose own deductions are smaller can tax more than shown.

What these estimates leave out

• Michigan's own standard deduction, exemptions and credits: the estimate starts from federal taxable income instead, which takes off the larger federal deductions.
• City income taxes, and capital gains rules a state applies apart from its rate.
• Rules for military and public-employee pensions that some states treat separately.

What this means for your plan

In Michigan, what you owe depends less on the flat rate itself and more on how much of your income falls under the exemption. Social Security stays out of the picture. Pension and account withdrawals up to the limit are shielded, and anything above the limit is taxed at the flat rate. Early IRA withdrawals are the clear exception. Monte Climb runs these Michigan rules on your own plan. It can show how your filing status, the timing of withdrawals and the yearly changes to the limit could affect your state tax bill over the years.

Sources

1. Michigan income tax for 2026 (Monte Climb's audit grades it high)
2. Michigan's retirement-income rule: PA 4 of 2023; Form 4884 instructions
3. Rev. Proc. 2025-32 §4.14(1) and §4.14(3): the 2026 standard deduction and the additional amount at 65
4. IRC §86 and IRS Publication 915: how much of Social Security is taxable (thresholds set by statute, not indexed)
5. P.L. 119-21 (One Big Beautiful Bill Act) §70103: the $6,000 deduction for each person 65 or older, 2025–2028

Figures computed by code from Monte Climb's 2026 state tables (snapshot f024e17). An illustration, not tax advice.

Frequently asked questions

Does Michigan tax Social Security?

In 2026, Social Security is not taxed in Michigan.

What is Michigan's income tax rate in 2026?

Michigan has a flat 4.25% for 2026.

How much state tax would a retired couple pay in Michigan?

A married couple, both 67, with $106,000 of Social Security, pension and IRA income would owe about $0 to Michigan in 2026, by Monte Climb's estimate.