State Rep. Lynn Afendoulis — chair of the House Tax Policy Committee – today led her committee colleagues voting to repeal Michigan’s pension tax.

The committee’s advancement of the proposal is an important step in the effort to eliminate the tax on retirement income instituted in 2011.

“In every Michigan community, seniors facing financial struggles have an even tougher time because of an unexpected tax costing them more money in retirement,” said Afendoulis, of Grand Rapids Township. “The pension tax was started at a time when Michigan’s economy was struggling. The state budget was subsequently balanced, to some extent, at the expense of those who can least afford it. Now we are in better times, and we have an opportunity to look at this again and do what’s right for retirees.”

The committee’s vote advances the bill – one of the first introduced in the 2019-20 session – to the House Ways and Means Committee for further consideration.

House Bill 4006 would eliminate the pension tax approved in 2011, re-establishing Michigan’s previous retirement tax structure. Public pensions would be exempt from taxation and other retirement income would have higher deductibles for state income taxes. Social Security income would continue to be exempt.

The proposal also would eliminate Michigan’s current, complex three-tiered retirement tax structure – which now has different rules for taxpayers depending on what year they were born.

“I want this committee to be focused on good tax policy – and this is good tax policy,” Afendoulis said.

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