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Bill

SB 1

Individual income tax: retirement or pension benefits; limitations and restrictions on deductions of certain retirement or pension benefits and revenue distribution to state school aid fund; revise. Amends secs. 30 & 51 of 1967 PA 281 (MCL 206.30 & 206.51).

2023-2024 Regular Session Introduced by Sarah Anthony and 19 co-sponsors

Michigan bill adjusts retirement income tax deductions and directs resulting revenue increases to school funding, potentially raising taxes on some retirees' benefits.

referred to Committee on Tax Policy
#individualincometax:retirementorpensionbenefits #individualincometax:revenuedistributions #individualincometax:schoolaid
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WeVote Research Nonpartisan
Bill Summary · SB 1

Legislative bill overview

SB 1 modifies Michigan's income tax treatment of retirement and pension benefits by adjusting deductions and restrictions on certain retirement income. The bill channels resulting tax revenue changes toward the state school aid fund. This represents a targeted adjustment to how Michigan taxes retirement income while redirecting those funds to education.

Why is this important

Retirement income taxation directly affects seniors, retirees, and households relying on pensions—a significant portion of Michigan's population. Revenue redirected to schools impacts K-12 education funding, teacher resources, and school operations statewide. The policy also signals the state's priorities regarding which income sources it will tax more or less heavily.

Potential points of contention

  • Impact on retirees: Changes to retirement income deductions could increase tax burdens on fixed-income seniors, particularly those below middle income thresholds, versus wealthier retirees with diverse income sources
  • Fairness in taxation: Questions about whether retirement income should be taxed differently than wage income, and whether the change treats all retirees equitably regardless of income source (pensions vs. 401k distributions, etc.)
  • School funding sustainability: While directing revenue to schools addresses education needs, relying on adjustments to retirement taxation may create unstable long-term funding if retirement income patterns change or if this creates economic disincentives

Compiled from official sources — confirm details with the bill’s official record.

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