Northwest Wayne News

Retirees in the state may soon find more money in their bank accounts, after Gov. Gretchen Whitmer stated she wants to rescind the retirement tax during her recent State of the State address.

According to a news release, the repeal of the tax on retirement income, including pensions, 401(k) accounts, and IRAs would account for $1,000 annually for half a million households.

“Repealing the retirement tax will put Michiganders first and save half a million households $1,000 a year," Whitmer said on Jan. 26. "Michiganders who have worked hard, played by the rules, and budgeted for their whole lives should be able to retire and keep all of their hard-earned dollars. Putting money back in the pockets of retirees will help them afford the essentials from prescriptions, rent, utilities, car payments, to gifts for their grandkids."

In the following years, Whitmer's proposal would also exempt public pensions and reinstate deductions for private retirement income, including private-sector pensions, withdrawals from individual retirement accounts (IRAs) and the portion of a 401k account that focuses on an employer match, according to a news release.

"The repeal of the pension tax has been a priority of Michigan's labor movement since former Governor Snyder first taxed Michiganders' pensions," said Ron Bieber, president of the Michigan AFL-CIO. "Retirees across our great state are so grateful to have Governor Gretchen Whitmer as their champion, always prioritizing their dignity and the safety of the pensions they earned." 

"We support the governor's call to phase out the retirement tax that so egregiously pulled the rug out from under a large swath of retirees who planned and counted on a pension not diminished by taxation," AARP Michigan Director Paula D. Cunningham said.

Cunningham added that people in the state have worked hard for their money and deserve to retire with dignity.

“We urge state legislators to do the right thing by repealing this law and help build Michigan's reputation as the first 'age-friendly' state in the Midwest," she said.