Michigan tax deductions and write-offs (2026)

No. Michigan fully exempts military retired pay from state income tax. Other retirement income: For 2026, with the phase-in complete, all taxpayers may subtract public and private retirement benefits (pensions, 401(k), IRA) up to $67,610 single / $135,220 joint.

Partly. For 2026, with the phase-in complete, all taxpayers may subtract public and private retirement benefits (pensions, 401(k), IRA) up to $67,610 single / $135,220 joint. The 2026 limits come from sources citing Treasury's RAB 2026-1;.

No. Michigan deducts all Social Security income included in federal AGI. For 2026 through 2028, PA 24 of 2025 also lets taxpayers born after 1952 who are 67 or older claim both the Social Security deduction and the full senior standard deduction, instead of having the standard deduction reduced by their Social Security.

Yes: Michigan offers the Michigan Earned Income Tax Credit for Working Families, 30% of the federal EITC (refundable). Must claim the federal EITC. Rate has been 30% since tax year 2023.

Only instead of income tax: itemizers in Michigan pick sales tax (6% state rate, about 6% with local taxes) or state income tax, whichever is bigger. A flat 6% with no local sales taxes; for 2026, a vehicle trade-in reduces the taxable price by up to $12,000.

Yes on your federal return if you itemize, within the $40,400 SALT cap. Michigan adds its own break: Homestead Property Tax Credit up to $1,900 (2025) on MI-1040CR for homeowners and renters.

Yes: Michigan offers the Homestead Property Tax Credit. Refundable credit for renters and homeowners where 23% of rent paid generally counts as property tax; up to $1,900 for 2025, claimed on Form MI-1040CR. Michigan resident at least six months; must have a lease or rental agreement; total household resources of $71,500 or less for 2025, with the credit phasing down above $62,500.

Partly: Michigan's value-based registration tax is based on your vehicle's value, so it's deductible as personal property tax if you itemize. For 1984 and newer cars the fee is a percentage of the original MSRP, reduced for 3 years; older vehicles are weight-based.

Michigan has a flat 4.25% income tax, cities like Detroit add their own income tax, and the state is phasing out its tax on pension income.

Yes on your Michigan return: $5,000 single / $10,000 joint per return (net of qualified withdrawals). Only contributions to the state's own plan count. MESP/MI 529 Advisor only; deduction reduced by same-year qualified withdrawals; rollovers not deductible; MET prepaid is uncapped.

No: Michigan doesn't offer a state child tax credit. No child tax credit or care credit. Personal/dependent exemption of $5,800 per dependent (2025, indexed), plus $3,400 extra for dependents with certain disabilities. Michigan does have an earned income credit: 30% of the federal EITC.

Yes, as a business expense: Michigan charges $50 to form an LLC; ongoing: $25 annual statement. Due Feb 15; LLCs formed after Sept 30 skip the first Feb 15. Fee scheduled to drop to $15 after Sept 30, 2027.