Social Security taxation in Michigan - conflicting info from SSA agent about state tax withholding
Just started receiving my Social Security retirement benefits and I'm confused about taxation in Michigan. Everything I researched online said Michigan doesn't tax Social Security, but when I met with an SSA agent last week to finalize my application, she insisted that Michigan DOES tax Social Security and recommended I have 12% withheld! That seems really high to me, and now I'm wondering if the agent confused federal taxes with state taxes? I'm 67 and my total retirement income will be around $52,000 annually between SS and my pension. I don't want to underpay taxes, but I also don't want to have money unnecessarily tied up all year if Michigan truly doesn't tax SS benefits. Has anyone else in Michigan dealt with this? Did you have state taxes withheld from your SS checks? Any recommendations would be greatly appreciated!
18 comments
Join the conversation
Darcy Moore
The SSA agent was likely referring to FEDERAL taxes, not Michigan state taxes. Michigan does NOT tax Social Security benefits - you're right about that. However, depending on your total income, the federal government may tax up to 85% of your SS benefits. With your combined income of $52,000, you'll likely pay some federal tax on your SS benefits. The 12% withholding is for federal taxes only. You can adjust this on form W-4V if you think it's too high. I'm also in Michigan and have federal taxes withheld from my SS (I chose 10%), but nothing is withheld for Michigan state taxes because they don't tax SS benefits.
0 coins
Edward McBride
•Thank you so much for clarifying! That makes sense - the agent must have been talking about federal taxes but didn't specify. Do you think 12% is reasonable for federal withholding with my income level? I don't want a surprise tax bill next April.
0 coins
Dana Doyle
michigan doesnt tax ss benefits but feds do. agent was right about needing withholding but wrong if they said it was state tax. i have 10% taken out for federal and its about right for me
0 coins
Liam Duke
•THIS! The SSA folks often get confused about state-specific rules. When I started collecting SS 2 years ago, they told me Ohio doesn't tax it either, but THEY DO!!! Had to pay penalties because I believed them. Always double-check with your state's tax department.
0 coins
Manny Lark
I'm a retired tax preparer in Michigan. Here's the deal: 1. Michigan does NOT tax Social Security benefits. This has been true for years. 2. Federal taxation of SS benefits depends on your "combined income" (AGI + nontaxable interest + 1/2 of SS benefits): - Below $25,000 (single) or $32,000 (married): No tax on benefits - Between $25K-$34K (single) or $32K-$44K (married): Up to 50% taxable - Above $34,000 (single) or $44,000 (married): Up to 85% taxable 3. With $52,000 total income, you'll likely have 85% of your benefits subject to federal tax. 4. 12% withholding is reasonable for federal taxes at your income level. The agent incorrectly stated Michigan taxes SS (they don't), but was correct that you should have federal withholding.
0 coins
Edward McBride
•Thank you for this detailed breakdown! This is exactly what I needed to understand. So I'll keep the 12% federal withholding but can rest assured that Michigan won't be taking anything additional.
0 coins
Rita Jacobs
My sister had the EXACT same issue!!! The SSA told her Michigan taxes SS and she argued with them for 20 minutes! They need to train their people better. Michigan has NEVER taxed Social Security (at least not in the last 15 years I've lived here). But yeah, the federal government will definitely take their cut. I have 15% withheld because I have other income and hate owing at tax time.
0 coins
Dana Doyle
•thats crazy they still dont know basic state rules. they should have a cheat sheet or something
0 coins
Khalid Howes
I had a terrible time reaching someone at SSA to fix my withholding preferences. Kept getting disconnected or waiting 2+ hours. Finally used a service called Claimyr (claimyr.com) that got me connected to an agent in under 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent I spoke with confirmed Michigan doesn't tax Social Security. For federal, I'm having 10% withheld which should cover it based on my income.
0 coins
Edward McBride
•I've been having the same problem with the phone lines! I'll check out that service - thanks for sharing. I've been trying to get through for days to ask about this tax issue.
0 coins
Ben Cooper
•I was skeptical about Claimyr but it actually worked for me too. Got through in about 10 minutes when I'd been trying for days. Turns out the agent who set up my benefits had entered my address incorrectly which was causing all sorts of problems.
0 coins
Ben Cooper
You should check out the Michigan Department of Treasury website or call them directly. That will give you the definitive answer straight from the source. But everyone here is correct - Michigan does NOT tax Social Security benefits. I retired in 2024 and specifically researched this. Michigan is actually quite tax-friendly for retirees compared to many states. They also have a pension deduction based on your birth year and filing status. As for federal taxes, with your income level, having some withholding is smart. The 12% should cover you without giving the government too much of an interest-free loan.
0 coins
Liam Duke
•The pension deduction in Michigan is VERY age-dependent though. If you were born after 1952, there are severe limits. I got HAMMERED when I retired because I was born in 1960.
0 coins
Rita Jacobs
Has anyone tried adjusting their withholding after starting benefits? I initially had 7% withheld but want to increase it. Is it a big hassle to change it?
0 coins
Darcy Moore
•Not difficult at all. You just need to submit a new Form W-4V to Social Security. You can download it from the IRS website, fill it out (just check the box for your new withholding percentage), and mail it to your local Social Security office. Takes about 30-60 days to process in my experience.
0 coins
Manny Lark
One thing to keep in mind: even though Michigan doesn't tax Social Security benefits, your total income will affect whether your pension is taxable in Michigan. The rules depend on your birth year and filing status. For someone born after 1952, there's a limited pension/retirement income deduction once you reach age 67. For 2025, the deduction is around $22,000 for single filers and $45,000 for married filing jointly (these numbers get adjusted). So while your SS isn't taxed by Michigan, it might affect the taxation of your other retirement income. This might be why there was confusion.
0 coins
Edward McBride
•That's a great point I hadn't considered. I was born in 1957, so I'll need to look into the specific pension rules for my age group. Definitely don't want to be surprised at tax time!
0 coins
Sophie Duck
I'm new to this community and dealing with a similar situation in Michigan. Just want to confirm what everyone else is saying - Michigan absolutely does NOT tax Social Security benefits. I called the Michigan Department of Treasury directly last month when I was getting conflicting information, and they confirmed this on the phone. The SSA agents sometimes get state tax rules mixed up, which is frustrating when you're trying to make important financial decisions. I ended up having 10% withheld for federal taxes, which seems to be working well for my situation. For anyone else dealing with this confusion, I'd recommend calling your state's tax department directly rather than relying on federal SSA agents for state-specific tax advice. They're great with federal rules but not always up to date on all 50 states' different tax policies.
0 coins