Tags: Retirement | retirement in michigan | taxes

Taxes for Retirees in Michigan

By    |   Thursday, 11 Jun 2015 12:51 PM

Retirement in Michigan can be very affordable, but seniors must consider tax issues when budgeting their retirement funds. Taxes in Michigan are in the ballpark with most other areas of the country in terms of burden.

However, individual taxes, especially for retirees, vary greatly, so a little personal investigation is needed to estimate a person’s yearly taxes.

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Consider the following:

Income Taxes
Unfortunately, retirement in Michigan does not exempt a person from paying income taxes. While the federal taxes remain the same from state to state, rates differ for state taxes. Michigan’s rate of 4.25 percent for state income taxes is among the lowest, and the state exempts $4,000/person per tax year.

Before 2011; social security, and public pension, 401K, 457, and IRA incomes were not taxed for amounts less than $45,000, received annually. The rates have changed, and those turning 67 in 2020 will have choices in how they receive certain tax exemptions for social security and military pensions; however, they will be fully taxed on many previously protected sources of income.

State income tax withholding tables are available on the state’s website; use these to determine your take-home pay.

Sales and Excise Taxes
The state rate is 6 percent. No sales taxes are added for city, county or local governments.

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Property Taxes
In the state of Michigan property tax rates are based on millage, or mills. The mills are computed in respect to the property value, at 1/1000 of a dollar, and the Michigan Department of the Treasury offers an option on their database to calculate taxes by county.

According to the Tax Foundation, the average property tax per person in Michigan is $1344. Their website offers comparisons to other states and information about property tax topics.

As in any state, tax determination and calculations can be confusing. Seniors may be eligible for various tax relief programs, such as the principle residence exemptions for seniors and disabled persons.

Assistance for negotiation the web of tax-related issues can be found thru local organizations, the AARP website, or from professionals. The investment of time and fees could pay off in spades.

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Retirement in Michigan can be very affordable, but seniors must consider tax issues when budgeting their retirement funds. Taxes in Michigan are in the ballpark with most other areas of the country in terms of burden.
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Thursday, 11 Jun 2015 12:51 PM
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