The following are subtractions from income that can be taken on your Michigan return:
Amount Included In MI-1040 Line 10 From Military Retirement Benefits Due To Service In The US Armed Forces Or Michigan National Guard Benefits
You may subtract the amount of military benefits from your Michigan return that was included in your federal adjusted gross income.
Income Attributable To Another State
Michigan residents cannot deduct wages, salaries, or other compensation earned outside of Michigan. However, they may be eligible for a credit for taxes paid to another state.
Business income that is taxed by another state and Michigan must be apportioned. Income reported on the MI-1040H and carried to the MI-1040D is business income and is potentially subject to apportionment.
Capital gains from the sale of real property or tangible personal property that is located outside of Michigan must be adjusted.
Military Pay Included on MI-1040, line 10
Income received from Active duty military pay from the U.S. Armed Forces can be deducted. Enter only the taxable portion of social security and military pay that is included on your Federal 1040.
Income While A Resident Of A Renaissance Zone
If you were a full-year resident of a Renaissance Zone, you can subtract all earned income or received income. If you resided in a Zone for at least 183 consecutive days, you can subtract the portion you earned while a you were a resident of the Zone. To be eligible you must meet all of the following requirements:
- Be a permanent resident of a Renaissance Zone prior to January 1, 2012, for at least 183 consecutive days.
- Your local assessor’s office must approve your eligibility.
- Not be behind on any local or state taxes the Renaissance Zone Act has abated.
- File a Michigan income tax return each year.
- Must have $1 million or less of gross income.
Michigan Income Tax Refund
You can subtract you Michigan State Income tax refund that was included as income in your federal adjusted gross income.
Michigan First-Time Home Buyer Savings Program
An individual may open a first-time home buyer savings account with any financial institution authorized to do business in Michigan; the account may be used for the payment or reimbursement of eligible costs for the purchase of a single-family residence in Michigan by a qualified beneficiary designated on the account. A first-time home buyer savings account may be opened beginning January 1, 2022, through December 31, 2026. You can claim the deduction on withdrawals made from the same account up to a total deduction of $5,000 on a single return or $10,000 for a jointly filed return, to the extent not deducted in determining adjusted gross income (AGI).
Michigan Education Savings Program (MESP)
You may subtract the amount of contributions made to MESP, MiABLE or MAP accounts by the taxpayer, not subtracted when calculating the AGI. The subtraction can't be more than $10,000 for a single return or $20,000 for a joint return. The State of Michigan only permits the subtraction for contributions to 529 programs in Michigan.
Michigan Education Trust (MET)
You may subtract the entire contract amount and any fees required for a MET 529 prepaid tuition contract. Charitable contributions made to the MET Charitable Tuition Program can also be subtracted.
Oil And Gas Gross Income Included In AGI
You may deduct the gross income that is subject to Michigan severance tax from the Michigan Productions of oil and gas or nonferrous metallic minerals up to the amount included in your AGI.
MRTMA/Marihuana Expense Subtraction
Include ordinary and necessary expenses not deducted in determining AGI and for carrying out a trade or business licensed as a recreational marihuana establishment under the Michigan Regulation and Taxation of Marihuana Act (MRTMA).
Resident Tribal Member Income Exempted Under A State Tribal Tax Agreement
A member of a federally recognized Indian tribe that has an active tax agreement with the State of Michigan may subtract certain income from wages, interest or pension income that is included in their AGI.
Deductions For Taxpayers Born Before 1952
A recipient born between January 1, 1946 and January 1, 1962 or is retired as of January 1, 2013 and born after December 31, 1952, who receives, or whose spouse receives, retirement or pension benefits from employment with a governmental agency that was not covered by the federal SSA; is entitled to a greater retirement deduction.
Social Security and Railroad Retirement Benefits
You may subtract only the taxable portion of Social Security and rail road benefits (Tier 1 and 2) that was included in your federal adjusted gross income.
NOTE: Michigan compensation earned while living outside of your agreement area may not be deducted from your Michigan AGI.
Michigan Net Operating Loss Deduction
You can only subtract your Michigan NOL. Your Michigan NOL carryforward entered as a subtraction must be reduced by the domestic production activities deduction and the excess capital loss deduction attributable to Michigan that was used to arrive at your prior year AGI (see MI-1045 instructions).
Interest on U.S. Savings Bonds and Treasury Obligations
You can subtract income from U.S. government obligations (e.g., Series EE bonds, Treasury notes) including any income from U.S government obligations that were received through a partnership, S corporation, or any other pass-through entity.
To subtract this income from within the program, go to:
- Federal Section
- 1099-DIV, INT, OID
- Interest or Dividend Income
- Amount of Interest on U.S. Savings Bonds and Treasury Obligations that you want subtracted from your state return
To enter your Michigan subtractions from income, please go to:
- State Section
- Michigan Return
- Subtractions from Income
For additional information pertaining to Michigan Subtractions from Income, please click here.