State guide
Does Michigan tax retirement income? IRAs, Roth conversions and Social Security (2026)
By Secure Retirement PlannerUpdated
If you retire in Michigan in 2026, Social Security is not taxed, and pension and IRA income is exempt up to $135,220 on a joint return. Your Roth conversion shares that limit if you are 59½ or older when you convert. The limit is $67,610 on a single return. This is the first year a 2023 state law applies in full, so your birth year no longer limits you.
Your pensions and IRA withdrawals share the same limit. Any conversion above it is taxed at Michigan's flat 4.25%. If you are under 59½, your conversion doesn't qualify and is fully taxed.
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The short version
- Michigan says your traditional IRA to Roth conversion qualifies for the pension subtraction if you are at least 59½ when you convert.
- For 2026, whatever your birth year, you can subtract combined public and private retirement income up to $67,610 (single) or $135,220 (joint).
- Your pensions, IRA withdrawals and conversion all share that one limit.
- Michigan's rate stays at 4.25% for 2026.
- City income taxes like Detroit's exempt your retirement benefits, but tax IRA money you take before 59½.
Does Michigan tax retirement income?
Mostly no, up to a limit. Michigan does not tax your Social Security. For 2026, your public and private pensions and IRA money share one subtraction: $67,610 single or $135,220 joint. Income above that, or IRA money you take before 59½, is taxed at 4.25%.
| Income type | Taxed by Michigan in 2026? | Notes |
|---|---|---|
| Social Security | No | Subtracted from federal AGI |
| Public pensions | No, up to the limit | Shares the $67,610 or $135,220 limit. If you were born before 1946, older rules apply |
| Private pensions | No, up to the limit | Same combined limit. Cities like Detroit don't tax them |
| IRA and 401(k) withdrawals | No, up to the limit, at 59½ or older | 457 payouts and employee-only 401(k) money don't qualify |
| Roth conversions | No, up to the limit, at 59½ or older | Under 59½, fully taxed at 4.25% |
Does Michigan tax a Roth conversion?
It can, but often doesn't. The state Treasury says a conversion in your federal AGI is subject to Michigan tax. But it qualifies for the pension subtraction, within the law's limits, if you are at least 59½ when you convert.
So you face two tests: your age and your room. If you are 59½ or older and your total retirement income, including the conversion, is under the 2026 limit, Michigan doesn't tax it. Any amount over the limit is taxed at 4.25%.
Treasury confirmed on April 15, 2026 that the 2026 rate stays at 4.25%. The conditions for a cut were not met.
How did the 2023 law change Michigan's retirement tax, and does my birth year still matter?
From 2012 to 2022, Michigan limited the retirement subtraction by birth year. If you were born after 1952, you got almost nothing. Public Act 4 of 2023 phased those limits out over four years.
| Tax year | Who could use it | Share of the private pension limit | Joint limit |
|---|---|---|---|
| 2023 | Born 1946 to 1958 | 25% | $30,759 |
| 2024 | Born 1946 to 1962 | 50% | $64,040 |
| 2025 | Born 1946 to 1966 | 75% | $98,846 |
| 2026 and later | Everyone | 100% | $135,220 |
One combined limit
For 2026, your public pensions (including Michigan and federal ones), private pensions and IRA money are added together. They share the same $67,610 or $135,220 cap. If you are a retired teacher with a large state pension, you may have less room for a conversion than before.
Are there Michigan retirement accounts that don't qualify?
Yes, and they matter for your conversion. Treasury's rules say your IRA money qualifies only in certain cases. You must be 59½ or older, disabled, or taking lifetime equal payments, or the owner has died.
- 457 plans: Michigan law does not allow a pension subtraction for 457 payouts.
- 401(k) and 403(b): money from contributions made only by you, the employee, doesn't qualify.
- Rollovers: Treasury looks at where the money came from. Money you rolled from a 457 or employee-only 401(k) into an IRA may still not qualify.
- Roth IRA withdrawals: these are not in your federal AGI, so there is nothing to subtract and nothing taxed.
Check before an in-plan conversion
If you convert inside a 457(b), or convert your own deferrals inside a 401(k), you may not get the subtraction. Treasury doesn't spell this out for conversions, so confirm with a Michigan tax preparer.
Do Detroit and other Michigan cities tax a Roth conversion?
Usually not, if you are 59½ or older. Michigan cities with an income tax follow a shared city tax ordinance. It exempts annuities, pensions and retirement benefits.
Detroit's 2025 city instructions list pensions and annuities as not taxed. But they tell residents to report IRA payouts received before age 59½. Detroit's resident rate is 2.4%. Flint's 2025 instructions are even clearer. A conversion is taxable to a Flint resident unless the person converting is 59½ or older.
Other cities, such as Grand Rapids and Lansing, have their own forms. Check your city's instructions if you plan to convert before 59½.
What about Social Security, moving, and the federal bill?
Michigan subtracts the Social Security in your federal AGI. For 2026 to 2028, a 2025 law (Public Act 24) adds a break if you were born after 1952 and are 67 or older. You can take both the Social Security subtraction and the full Michigan standard deduction.
If you leave Michigan, federal law (4 U.S.C. 114) bars states from taxing people who no longer live there on IRA and pension income. With 2026's high subtraction, you may have little state reason to wait for a move. See Florida if you are heading south.
For most people, federal tax is the larger cost. Try your numbers in Roth conversion tax calculator.
Example: a couple just over the 2026 limit
Mark, 63, gets a $70,000 private pension. Sue, 62, takes $20,000 a year from her IRA. They also have $15,000 of CD interest, which uses up their Michigan personal exemptions. In 2026 Sue converts $50,000 of her IRA. Neither has started Social Security.
Their federal taxable income goes from $72,800 to $122,800. That puts $28,000 in the 12% bracket and $22,000 in the 22% bracket. That adds $8,200 of federal tax.
In Michigan, their retirement income rises from $90,000 to $140,000. The joint limit is $135,220, so $4,780 of the conversion is taxed at 4.25%, about $203. If Sue converted $45,220, the conversion would fit under the limit and add $0 Michigan tax.
Because Sue is over 59½, Detroit or Flint residents would owe no city tax on it. Under 59½, a Detroit resident would also owe 2.4% city tax, $1,200 on $50,000.
What this means for you: in Michigan, sizing your conversion to fit under the limit can keep your state bill at zero.
| No conversion | Convert $45,220 | Convert $50,000 | |
|---|---|---|---|
| Federal AGI | $105,000 | $150,220 | $155,000 |
| Federal tax added | about $7,148 | $8,200 | |
| Retirement income | $90,000 | $135,220 | $140,000 |
| Michigan subtraction | $90,000 | $135,220 | $135,220 |
| Michigan tax added | $0 | about $203 |
Hypothetical example. Assumes married filing jointly, both under 65, no Social Security, all retirement income from private sources, Sue over 59½, the 2026 federal standard deduction ($32,200) and brackets (IRS Rev. Proc. 2025-32), and Michigan's 2026 joint limit ($135,220) and rate (4.25%). It assumes their interest income already exceeds their Michigan personal exemptions. It ignores Medicare IRMAA. Your numbers will differ.
Common questions
Does Michigan tax Roth conversions?
Only in some cases. If you are at least 59½ when you convert, your conversion qualifies for the pension subtraction. The 2026 limit is $67,610 single or $135,220 joint. Amounts over the limit, or conversions before 59½, are taxed at 4.25%.
Does my birth year still matter for Michigan's retirement subtraction?
Not for 2026. Public Act 4 of 2023 is fully phased in, so you can subtract up to the same limit as everyone else. If you were born before 1946, you keep your older rules for public pensions.
What is Michigan's income tax rate for 2026?
4.25%. Michigan Treasury announced on April 15, 2026 that the conditions for a rate cut were not met.
Does Michigan tax Social Security?
No. You subtract the Social Security in your federal AGI on your Michigan return.
Does Detroit tax a Roth conversion?
Detroit doesn't tax pensions and annuities, but its instructions say residents report IRA payouts received before 59½. If you are 59½ or older, Detroit generally won't tax your conversion.
Can I convert 457(b) money and get the Michigan subtraction?
Probably not. Michigan's law doesn't allow a pension subtraction for 457 plan payouts. Ask a Michigan preparer before you convert 457 money.
Is the 2026 Michigan limit per person or per return?
Per return: $67,610 if you file single or married filing separately, and $135,220 on a joint return.
Sources
Facts on this page were last checked on November 9, 2026.
- Michigan Treasury, Are conversions from a regular IRA to a Roth IRA subject to Michigan income tax? · Conversions taxable but qualify for the subtraction at 59½+. Read Nov 9, 2026.
- Michigan Treasury, Revenue Administrative Bulletin 2026-1 (approved Jan 8, 2026) · Phase-in schedule, combined public and private limit, rollover look-through, PA 24 of 2025. Read Nov 9, 2026.
- Michigan Office of Retirement Services, Public Act 4 of 2023 FAQ · 2026 limits of $67,610 and $135,220. Read Nov 9, 2026.
- Michigan Treasury, Individual plans (qualified pension distribution requirements) · 59½ rule for IRAs, 457 and employee-only 401(k) exclusions. Read Nov 9, 2026.
- Michigan Treasury, State individual income tax rate for 2026 tax year determined (Apr 15, 2026) · 4.25% rate for 2026. Read Nov 9, 2026.
- Michigan Treasury, 2025 City of Detroit individual income tax instructions · 2.4% resident rate, pensions exempt, IRA distributions before 59½ taxable. Read Nov 9, 2026.
- Michigan Legislature, MCL 141.632 (Uniform City Income Tax Ordinance, exempt income) · Annuities, pensions and retirement benefits not subject to city tax. Read Nov 9, 2026.
- City of Flint, 2025 F-1040 instructions · Conversion taxable to residents unless 59½ or older. Read Nov 9, 2026.
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments) · 2026 federal brackets and standard deduction. Read Nov 9, 2026.
Who wrote this
This guide was written and fact-checked by the Secure Retirement Planner editorial team using IRS, CMS and Social Security sources listed above. We update guides when the law or yearly limits change. How we research.