According to the Michigan Department of Treasury, military retirement is exempt from Michigan individual income tax. Military retirement benefits may be deducted to the extent they are included in your federal adjusted gross income.
This exclusion is not automatically calculated by the program when you create your Michigan return. You will need to manually exclude this income by going to:
- State Section
- Edit Michigan Return
- Subtractions From Income
- Amount included in MI-1040, line 10, from military retirement benefits due to service in the U.S. Armed Forces or Michigan National Guard.