Retiring in Michigan

Every figure below is sourced to Michigan’s own publications and dated. Estimates only, and not tax advice.

Retirement tax by state

What your state actually takes from a 401(k) withdrawal, a pension, and Social Security — in dollars, not a yes/no list.

Brokerage account growth

Long-term index-fund growth after expense-ratio drag — and what your state takes from the gains at withdrawal.

Roth vs. Traditional

Decided on the two rates that actually govern it — yours now, and yours at withdrawal, in the state you'll retire in rather than the one you're in.

Contribution limit optimizer

2026 limits, employer match, the 60-63 super catch-up, and whether the Roth catch-up mandate applies to you.

Required minimum distribution

When your RMDs start under SECURE 2.0, how much this year's is, and what missing it costs.

Backdoor Roth pro-rata

What a backdoor Roth conversion would actually cost you in tax — the pro-rata rule most calculators only describe.

Self-directed IRA real estate (UDFI)

The tax a leveraged rental owes inside a self-directed IRA — computed at trust rates, not the rate you'd assume.

Michigan at a glance

401(k) and IRA withdrawals
Partly excluded
Social Security
Not taxed
Top marginal rate
4.25%
A flat rate on all taxable income.
Tax year
2026
Brackets are legislated and change on a fixed calendar, so the year matters.
  • PUBLIC ACT 24 OF 2025 CHANGES THE 2026 MATH AND IS MISSING FROM MOST SUMMARIES. For tax years 2026 through 2028 only, a filer born after 1952 who has reached age 67 may subtract BOTH their Social Security income and a full Michigan standard deduction — the prior requirement to reduce the standard deduction by the Social Security subtraction is lifted. The standard deduction must still be reduced by the personal exemption and by any military, National Guard, or railroad retirement subtraction, and MCL 206.30(9)(e) bars taking the personal exemption at all when the $20,000/$40,000 deduction is claimed. Treasury's own worked example shows a single 71-year-old with $35,000 AGI going from $12,200 of Michigan taxable income in 2025 to $3,000 in 2026 on identical income, purely from this change.
  • MICHIGAN DOES HAVE A STANDARD DEDUCTION, contrary to the common summary — just not a general one. There is no deduction against ordinary income for filers under 67, which is why standardDeduction is recorded as zero here. But MCL 206.30(9) provides a Michigan Standard Deduction of $20,000 single / $40,000 joint against ALL income once the older spouse reaches 67 (for those born after 1945), with enhanced amounts of $35,000 / $55,000 / $70,000 for retirees from government agencies not covered by Social Security. It is ELECTIVE — a filer takes whichever of the standard deduction or the retirement subtraction produces lower taxable income — and this calculator models only the retirement-subtraction branch. For an age-67-plus Michigan filer the standard-deduction branch may produce a materially lower bill, so a Michigan result here can OVERSTATE the tax for that group.
  • Michigan's rate is flat and does not vary by filing status. MCL 206.51 applies a single rate to 'the taxable income of every person other than a corporation' with no bracket table anywhere in the section. Filing status affects Michigan tax only through the number of exemptions and the doubled retirement and standard-deduction dollar caps.

Local income tax applies in parts of Michigan

Twenty-four Michigan cities levy an income tax: Albion, Battle Creek, Benton Harbor, Big Rapids, Detroit, East Lansing, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield, and Walker. Detroit is administered by the Department of Treasury; the other 23 administer their own. The default is 1% resident / 0.5% nonresident under the Uniform City Income Tax Ordinance (MCL 141.611), and the nonresident rate is ALWAYS capped at half the resident rate. Named exceptions rest on separate statutory ceilings: Detroit at 2.4%/1.2% (MCL 141.503(2)(d), dropping to 2.2%/1.1% once lighting-authority bonds are retired), Grand Rapids and Saginaw at 1.5%/0.75% (MCL 141.503c, for cities levying before 1989-03-30), and Highland Park at up to 2%/1% (MCL 141.503a(2), voter-approved). Rates vary by city, so no single figure is recorded as the state's local rate.