Starting with the 2020 tax year, a new state law sponsored by Rep. Julie Alexander will help protect the finances of surviving spouses after the death of their loved one.

The need for a change in state law was brought to Alexander’s attention by a Jackson resident. Alexander’s reform clarifies Michigan law and eliminates pension tax penalties when an older spouse dies and leaves behind a younger spouse.

“This is a fantastic example of how listening to the residents of Jackson County leads to improvements in state law that will help people all across Michigan,” said Alexander, of Hanover. “This change will protect surviving spouses from unexpected and unfair income tax penalties — including seniors trying to make ends meet on fixed incomes. While suffering the pain of losing a husband or wife, the last thing a surviving spouse needs is the shock of an unexpectedly higher income tax bill.”

The clarification was needed because Michigan taxes retirement income differently depending on the year a taxpayer was born. The income tax benefits are best for those born before 1946, and taxation rates are fully phased in for those born after 1952.

Because of these varying taxation levels, couples with spouses in different age tiers often choose to file joint tax returns using the age of the older spouse. Alexander’s new law – signed by the governor last month — will allow a surviving younger spouse to continue filing under the deceased older spouse’s age as long as the surviving spouse does not remarry.

The issue was brought to Alexander’s attention by Sue Macrellis of Jackson, whose husband Michael died in 2014. The couple’s pension income previously had not been taxed because Michael Macrellis was born before 1946. But the state began taxing the exact same pension income after his death because Sue Macrellis was born after 1946 – costing her hundreds of dollars a year.

“This unfair, unjust penalty will be a thing of the past starting with the 2020 tax year,” Alexander said.

House Bill 4171 is now Public Act 65 of 2020.