Michigan does not tax Social Security benefits
Michigan is one of the states that does not impose a state income tax on Social Security retirement, survivor, or disability benefits. If you live in Michigan and receive Social Security, you will not owe Michigan state income tax on those payments, regardless of how much you receive or what other income you have.
However, your Social Security benefits may still be taxed at the federal level. The federal government taxes Social Security differently than Michigan does, and the amount you owe depends on your total income from all sources — not just Social Security. Understanding the difference between state and federal taxation is important because you may still have a federal tax obligation even though Michigan does not tax your benefits.
Key Takeaways
- Michigan does not tax Social Security benefits at the state level, so you will not owe Michigan income tax on any amount you receive.
- The federal government may tax your Social Security benefits if your total income exceeds certain thresholds, which vary depending on your filing status.
- Your "combined income" for federal tax purposes includes half of your Social Security benefits plus all other income, including wages, pensions, and interest.
- You can request that the Social Security Administration withhold federal taxes from your monthly payment to avoid owing a large amount at tax time.
How federal taxation of Social Security works
The federal government uses a formula based on your combined income to determine whether your Social Security is taxed. Combined income means half of your Social Security benefits plus all your other income — wages, pensions, interest, dividends, and rental income. It does not include certain types of income like municipal bond interest.
If your combined income falls below a certain threshold, none of your Social Security is taxed federally. If it exceeds the threshold, up to 50 percent or 85 percent of your benefits may be taxable, depending on how much your combined income exceeds the limit. The thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These thresholds have not changed since 1984.
Because the thresholds are fixed and do not adjust for inflation, more people have become subject to federal taxation of their benefits over time. Even modest retirement income from pensions or part-time work can push you over the threshold.
What income counts toward the federal threshold
When calculating whether your Social Security is taxed federally, the Social Security Administration counts income from many sources. Wages from employment, self-employment income, pensions, interest, dividends, capital gains, and rental income all count. If you are married and file jointly, your spouse's income counts too, even if your spouse does not receive Social Security.
Some types of income do not count. Tax-exempt interest from municipal bonds is excluded. Supplemental Security Income (SSI) does not count. Veterans benefits do not count. Gifts and inheritances do not count. If you are still working, only earned income counts — not the value of assets you own.
The Social Security Administration provides a worksheet with your annual statement that lets you calculate your combined income. You can also use the IRS Social Security Worksheet or ask a tax preparer to calculate it for you.
When you might owe federal tax on Social Security
You are more likely to owe federal tax on your Social Security if you have other sources of income. Common situations include receiving a pension from a government job, continuing to work part-time after claiming Social Security, receiving rental income, or having substantial savings that generate interest or dividends.
If you are married and one spouse receives Social Security while the other receives a pension, the combined income calculation can push both of you into the taxable range. This is especially common for people who worked in government jobs that did not withhold Social Security taxes — their pensions can trigger taxation of their spouse's benefits.
If your combined income is between $25,000 and $34,000 (single) or $32,000 and $44,000 (married filing jointly), you may owe tax on up to 50 percent of your benefits. If your combined income exceeds $34,000 (single) or $44,000 (married filing jointly), up to 85 percent of your benefits may be taxable.
How to handle federal withholding on your Social Security
If you expect to owe federal income tax on your Social Security, you can ask the Social Security Administration to withhold taxes from your monthly payment. This prevents a large tax bill at the end of the year and spreads the tax obligation across all twelve months.
To request withholding, fill out Form W-4V (Voluntary Withholding Request) and send it to your local Social Security office or mail it to the address on the form. You can choose to have 7, 10, 12, or 22 percent of your benefit withheld. You can change your withholding request at any time, and you can stop withholding if your situation changes.
If you do not request withholding and you owe tax on your Social Security, you will need to pay the tax when you file your federal income tax return. Some people make quarterly estimated tax payments instead. A tax preparer or the IRS can help you decide which approach works best for your situation.
Michigan tax forms and Social Security
When you file your Michigan state income tax return, you do not report Social Security benefits as income. Michigan Form MI-1040 (the state income tax return) does not have a line for Social Security income, and you should not include it anywhere on the form.
If you file a federal return because you owe federal tax on your Social Security, you will report the taxable portion on your federal return (Form 1040, Schedule 1). You will not report any of it on your Michigan return. This means you could owe federal tax while owing nothing to Michigan, or you could owe nothing to either state or federal government if your combined income is below the federal threshold.
Frequently Asked Questions
Do I have to file a Michigan tax return if I only receive Social Security?
No. Michigan does not tax Social Security, and if Social Security is your only income, you have no Michigan income tax obligation. You may still need to file a federal return depending on your total income and filing status, but that is separate from Michigan taxes.
What if I receive both Social Security and a pension from a Michigan government job?
Michigan does not tax either the Social Security or the pension. However, you may owe federal tax on your Social Security if your combined income (including the pension) exceeds the federal threshold. The pension itself is not taxed by Michigan, but it counts toward the calculation that determines whether your Social Security is taxed federally.
Can I reduce the amount of federal tax owed on my Social Security?
You cannot reduce the amount itself, but you can manage when you pay it. Requesting federal withholding spreads the tax across the year instead of owing it all at once. You could also explore whether delaying Social Security or reducing other income sources would lower your combined income below the federal threshold, though this requires careful planning with a tax professional.
If I move out of Michigan, will my Social Security become taxable?
Not because you moved. Some states do tax Social Security, but whether you owe tax depends on the state where you live, not where you received benefits. If you move to a state that taxes Social Security, you would then owe that state's tax. Federal taxation remains the same regardless of which state you live in.
Do I need to report my Social Security to Michigan when I file?
No. You do not report Social Security income anywhere on your Michigan tax return. If you file a federal return, you report the taxable portion there, but Michigan does not require any Social Security information on state forms.