For many years, income in Michigan was taxed differently for different age groups and different sources. Starting in 2011, that all changed when fairness was brought to the state’s income tax code and all senior citizens were treated equally, regardless of their source of income.
It’s all laid out visually for reference in the graphic below — with the “Then” side noting how a couple’s income was treated prior to the 2011 law and the “Now” side showing how it’s being treated today — but the basic premise is that Michigan’s updated tax code now treats the income of retirees like that of working seniors. We also grandfathered in (no pun intended) the more elderly members of Michigan’s senior community by making no changes for their income taxes.
We also made a cut in the income tax rate for everyone who pays it from 4.35 percent to 4.25 percent to assist in relieving the overall tax burden for all Michiganders.
There is a lot of rhetoric being tossed about by people trying to mislead folks into believing new taxes were created for seniors. But the reality is that a 100-percent tax exemption was ended for those with government pensions, leveling the playing field with their neighbors who are using 401K plans for their retirement.
Providing fairer taxes for all ages — regardless if the income is from a 401k or a government pension — means a brighter future for all of Michigan’s retirees.