The following information is new for the 2021 tax year for Michigan state taxes
Homestead Property Tax
- Minimum taxable increased to $136,600
- Total household resources limit increased to $60,600
- Phase-out begins when household resources exceed $51,600
Tier 3 Michigan Standard Deduction
You may be eligible for a deduction of up to $20,000 if single or $40,000 if married filing jointly if the older of you (or your spouse for joint returns) were born January 1, 1953 through January 1, 1955, and you reached the age of 67 on or before December 31, 2021.
Retirement benefit subtraction expanded
If the older of you or your spouse (if married filing jointly) was born after January 1, 1955 but before January 2, 1960, have reached age 62 and receive retirement benefits from employment with a governmental agency that was exempt from Social Security, you may be eligible for a retirement and pension deduction. (MI-1040)
Retirement Benefit Deduction from Deceased Spouse
"If a surviving spouse claimed a subtraction for retirement and pension benefits on a return jointly filed with the decedent in the year they died and the surviving spouse has not remarried, then the surviving spouse may claim the retirement and pension benefits subtraction that would have applied based on the year of birth of the older of the surviving spouse or the deceased spouse." (MI-1040)
Net Operating Loss (NOL)
For taxpayers who have a federal NOL deduction, you will need to remove the federal NOL deduction from the Michigan taxable income. Residents will do this through an addition on Michigan Schedule 1, line 7. If you are a part-year or nonresident and required to file a Michigan Schedule NR, you will allocate the entire federal NOL deduction, no matter where earned, to column C.
"The Michigan NOL deduction in a carryforward year is calculated on Michigan Net Operating Loss Deduction (Form 5674). The Michigan NOL deduction in a carryforward year is claimed on Michigan Schedule 1, line 28. To request a refund from a farming loss carryback use the Michigan Farming Loss Carryback Refund Request (Form 5603)."
Adjusted Gross Income (AGI)
If your AGI included excess business loss limitation, taxpayers will need to complete the Michigan Excess Business Loss (Form MI-461)