HB 4201 Michigan House · 2025-2026 Regular Session

Individual income tax: retirement or pension benefits; department of corrections retirement and pension benefits; exempt from income taxes. Amends sec. 30 of 1967 PA 281 (MCL 206.30).

HB 4201 amends Michigan's income tax law to exempt certain retirement benefits from state taxation. It specifically adds a deduction for retirement or pension benefits received from Michigan's public retirement systems (like state employee pensions) or federal public retirement systems. This directly affects Michigan residents who receive these types of public-sector retirement benefits by reducing their taxable income. The change modifies Section 30 of Michigan's Income Tax Act (MCL 206.30) to exclude these benefits from taxable income calculations.

Bill status passed both 4 of 5 stages cleared

Introduction

Mar 2025

Committee Review

May 2025

House Passage

May 2025

Senate Passage

May 2025

Governor

Introduced Mar 11, 2025 Last action May 20, 2025

Maddy AI version diff · 2 comparisons

What changed between versions

As Passed by the House → Substitute (H-3) · 3 edits

MINOR

The bill text shows minor formatting and metadata changes rather than substantive policy modifications. The primary differences involve adjustments to the bill header formatting, spacing, and tracking identifiers (KAS codes and document numbers), with no changes to the actual legislative content regarding income tax definitions or adjustments.

TECHNICAL

Formatting changes to bill header spacing and alignment in the title section

Updates to tracking identifiers (KAS codes and document numbers) from 'dg1saj' to '6gcx7d'

Added blank line after the bill title section for formatting consistency

House Introduced Bill → As Passed by the House · 10 edits · May 14, 2025

MAJOR

This bill amends Michigan's income tax law to expand deductions and exemptions for various groups, including veterans, disabled individuals, tribal members, and those with specific financial situations like ABLE accounts and first-time home buyers. It also introduces new provisions for wrongful imprisonment compensation and student loan discharge for disabled veterans, while eliminating certain deductions related to oil and gas production. The changes aim to provide greater tax relief to specific populations and align Michigan tax policy with federal changes and emerging needs.

Scope change

The bill expands the scope of eligible taxpayers by adding new categories of individuals who qualify for specific tax deductions, including disabled veterans, resident tribal members, and those with ABLE or first-time home buyer savings accounts.

ELIGIBILITY

Added new deductions for disabled veterans who have student loans discharged due to total and permanent disability, effective for tax years beginning on or after January 1, 2025.

Added deductions for resident tribal members for nonbusiness income earned during the period when their tribe has an agreement with the state in full force and effect.

Added deductions for contributions to and qualified withdrawals from ABLE (Achieving a Better Life Experience) savings accounts, mirroring existing education savings account provisions.

Added deductions for contributions to and qualified withdrawals from first-time home buyer savings accounts, with the deduction ending for tax years after December 31, 2026.

Added deduction for compensation received pursuant to the wrongful imprisonment compensation act.

Eliminated deductions for income and expenses related to producing oil and gas.

Added new deduction for Holocaust victims receiving compensation from settlements related to Nazi Germany property claims.

Added deduction for wagering losses for nonresidents attributable to wagering at Michigan casinos or licensed race meetings, effective for tax years beginning on or after January 1, 2021.

Added special deduction rules for public police, fire department, state police, and corrections officers regarding retirement or pension benefits, effective for tax years beginning on or after January 1, 2023.

TIMELINE

Extended the phase-out of retirement pension benefit deductions for individuals born after 1945, with full elimination beginning January 1, 2025 for those born after 1945.

Floor votes · House May 14, 2025

How they voted

This bill passed the Senate by voice vote (no roll call recorded).

Full legislative history

Actions timeline

Total actions

Key actions

Committee

May 20, 2025

Committee

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION

upper

May 20, 2025

Upper · Passed

PASSED BY HOUSE WITH IMMEDIATE EFFECT

upper

May 14, 2025

Lower · Passed

passed; given immediate effect Roll Call #116 Yeas 102 Nays 4 Excused 0 Not Voting 4

lower

May 14, 2025

Lower · Passed

substitute (H-3) adopted

lower

Apr 22, 2025

Committee

referred to second reading

lower

Apr 22, 2025

Lower · Passed

reported with recommendation with substitute (H-3)

lower

Mar 11, 2025

Committee

referred to Committee on Finance

lower

Mar 11, 2025

Introduced

introduced by Representative Rep. Kathy Schmaltz

lower

1 primary · 21 co-sponsors