Michigan does not tax Social Security benefits
Michigan exempts all Social Security income from state income tax. If you receive Social Security retirement, survivor, or disability benefits, you will not owe Michigan state tax on that money. This applies whether you are retired, disabled, or receiving benefits as a spouse or dependent.
However, Social Security can still affect your federal tax bill. The federal government taxes Social Security benefits for some people based on a formula called "combined income." Your state tax situation and your federal tax situation are separate — Michigan's exemption covers only the state portion.
You may also receive other retirement income (pensions, 401(k) withdrawals, investment earnings) that Michigan does tax. Understanding which income is taxable in Michigan and which is not helps you plan what you owe each year.
Key Takeaways
- Michigan does not tax Social Security retirement, disability, or survivor benefits at the state level.
- Federal tax on Social Security depends on your combined income, not on Michigan's rules, so you may still owe federal tax even though Michigan taxes nothing.
- Other retirement income you receive — such as pensions, 401(k) distributions, or IRA withdrawals — may be taxable in Michigan depending on the source.
- You report Social Security income on your federal return but not on your Michigan return.
What counts as Social Security income in Michigan
Social Security income includes monthly benefits you receive from the Social Security Administration for retirement, disability (SSDI), or as a survivor. It also includes any lump-sum payments or back pay from Social Security. Michigan treats all of these the same way: none of it is taxable state income.
Supplemental Security Income (SSI) is different from Social Security. SSI is a needs-based program run by Social Security but funded by general tax revenue, not by payroll taxes. Michigan also does not tax SSI.
If you receive a combination of Social Security and other income — for example, a pension and Social Security — only the non-Social Security portion may be subject to Michigan tax. Pensions, 401(k) withdrawals, and investment income follow different rules.
How federal taxation of Social Security works
The federal government uses a "combined income" calculation to decide whether to tax your Social Security. Combined income is your adjusted gross income plus tax-exempt interest plus half of your Social Security benefits. If your combined income exceeds certain thresholds, part of your Social Security becomes taxable at the federal level.
For 2024, if you file as single and your combined income is between $25,000 and $34,000, you may owe federal tax on up to 50 percent of your benefits. If your combined income exceeds $34,000, you may owe tax on up to 85 percent of your benefits. The thresholds are higher for married couples filing jointly ($32,000 to $44,000, and above $44,000).
These federal thresholds have not changed since 1984, so more people fall into the taxable range each year as incomes rise. Michigan's exemption does not change this federal calculation — it only removes the state tax layer.
Other retirement income Michigan does tax
Michigan taxes most other forms of retirement income. Distributions from traditional IRAs and 401(k) plans are taxable. Pension income from a private employer or government job is taxable. Interest and dividends are taxable. Rental income is taxable.
The one major exception is military retirement pay, which Michigan exempts. If you receive a military pension, that income is not subject to Michigan state tax.
If you are under age 67 and receiving retirement income other than Social Security, Michigan taxes that income at the state rate of 4.25 percent (as of 2024). Once you reach 67, you may be able to exclude some pension income under Michigan's pension exemption, but the rules depend on the type of pension and when you started receiving it.
Filing your Michigan tax return with Social Security income
You do not report Social Security income on your Michigan return. When you file your federal return (Form 1040), you will report your Social Security benefits on lines 5a and 5b. Your Michigan return (Form MI-1040) does not ask for Social Security income at all.
If you use tax software, the program will ask about Social Security when you complete the federal section. When you move to the Michigan section, that income will not carry over — it will not appear on your state return because Michigan does not tax it.
You still need to file a Michigan return if you owe tax on other income (pensions, investments, wages) or if you are required to file for any other reason. The Social Security exemption straightforward means you skip that line item on the Michigan form.
Estimated tax payments and Social Security
If your only income is Social Security, you do not need to make estimated tax payments to Michigan. Since Michigan does not tax Social Security, there is no state tax to pay in advance.
If you have other income that is subject to Michigan tax — such as a pension or part-time work — you may need to make estimated payments or have tax withheld. The amount depends on how much tax you expect to owe. Social Security income does not count toward that calculation.
Your employer or pension provider can withhold Michigan tax from your payments if you ask them to. This is often simpler than making estimated payments yourself, especially if you are not sure how much you will owe.
Frequently Asked Questions
Do I have to file a Michigan tax return if I only get Social Security?
Not necessarily. If Social Security is your only income and you have no other reason to file (such as a refund you want to claim), Michigan does not require you to file. However, if you have other income subject to Michigan tax, you must file even if your Social Security is exempt.
Will my Social Security affect my Michigan tax on other income?
No. Michigan taxes your other income separately. Social Security does not reduce the amount of tax you owe on pensions, wages, or investments. It straightforward does not add to your taxable income in Michigan.
Does Michigan's exemption help with federal taxes too?
No. Michigan's exemption applies only to state tax. Your federal tax on Social Security depends on your combined income and federal thresholds, which are set by federal law. Michigan's rules do not change what you owe the IRS.
What if I moved to Michigan after receiving Social Security in another state?
Your Social Security income remains exempt in Michigan regardless of where you lived before. The exemption applies to all Social Security income you receive while living in Michigan, no matter when you started receiving benefits.
Is there a limit to how much Social Security Michigan will not tax?
No. Michigan exempts all Social Security income, regardless of the amount. There is no cap or limit on the exemption. If you receive $1,000 a month or $5,000 a month in Social Security, none of it is taxable in Michigan.