Michigan Tax Increases - Seniors

The Michigan legislature in May of this year passed several sweeping tax bills which will hit Seniors hard. This legislation was signed by Governor Snyder and goes into effect January 1, 2012.

For this summary, I thank the monthly newsletter "Aging Alert", published by the Area Agencies on Aging Association of Michigan.

The new law establishes three categories of Seniors as:
1. Born before 1946
2. Born between January 1, 1946 and December 31, 1952
3. Born after 1952

The new law creates classifications and distinctions for the tax impact on pension income, public and private.

For all three categories social security and military pensions will not be taxed.

The other effects of the new Michigan law may affect you or somebody in your family.

Born Before 1946.1. Public pensions not taxed.
2. Private pensions exempt up to $45,120/ single or $90,240/joint.
3. Investment income could be exempt up to $10,058/single or $20,115/joint.
4. Extra $2,300 exemption eliminated

Born between January 1, 1946 and December 31, 1952.
1. Up through age 66 retirement income up to $20,000/single or $40,000/joint not taxed.
2. Beginning at age 67 all income up to $20,000/single or $40,000/joint not taxed, except
3. If total income is over $75,000/single or $150,000/joint the $20,000/$40,000 exemption
cannot be taken.

Born after 1952.1. Public and private pensions taxed.
2. Beginning at age 67 there are two options
(1) keep the social security exemption and personal exemption
(2) count all income, including social security (except exemption of social security
$20,000/single or $40,000/joint), with no personal exemption
3. Option (2) not available if income is over $75,000/single or $150,000/joint

Conclusion. These changes may affect you or somebody in your family. Talk to your tax preparer to get more information. We thank Aging Alert for its succinct summary of the changes in Michigan law affecting Seniors.

If changes in your investments will affect your estate plan, you should contact Jim Modrall or Priscilla Hirt at (231) 941-9660, or any of the attorneys listed below.

Donald A. Brandt, Joseph C. Fisher, Thomas R. Alward, Matthew D. Vermetten, Thomas A. Pezzetti, Jr., James R. Modrall, III, Susan Jill Rice, Gary D. Popovits, H. Douglas Shepherd, David H. Rowe, Nicole R. Graf, Priscilla V. Hirt or E. Molly Kuras at (231) 941-9660

BRANDT, FISHER, ALWARD & PEZZETTI, P.C.

This newsletter is provided for informational purposes and should not be acted upon without professional advice.