Here are 6 Changes to Michigan Taxes for 2022 according to Michigan.gov/taxes
- Exemption allowances and the tax rate:
- $5,000 for personal and dependent exemptions
- $2,900 for special exemptions
- $400 for qualified disabled veterans
- $5,000 for number of certificates of stillbirth from MDHHS
- 4.25% tax rate
- Flow-through Entity Tax Credit
A member of a flow-through entity that elected to pay the Michigan flow-through entity tax may claim a refundable credit, and will report an addition on Schedule 1. Tax year 2022 MI-1040 or MI-1041 returns claiming this credit are eligible for e-file. For additional information, see the instructions for MI-1040, line 29 and Schedule 1, line 2, or the instructions for Form MI-1041.
- Schedule 1 Additions and Subtractions:
- Line 25: Tier 3 Michigan Standard Deduction. Taxpayers who were born during the period January 1, 1953 through January 1, 1956, and reached the age of 67 on or before December 31, 2022, may be eligible for a Tier 3 Michigan Standard Deduction. This deduction is up to $20,000 for a return filed as single or married filing separately, or up to $40,000 for a married filing jointly return. Exemption(s) claimed on MI-1040, lines 9a and 9d, taxable Social Security benefits, military compensation (including retirement benefits), Michigan National Guard retirement benefits and railroad retirement benefits included in AGI may reduce the amount eligible to be claimed on this line. To determine your deduction, complete Worksheet 2.
Note: Filers who qualify for the Michigan Standard Deduction should not file Form 4884.
- Line 27 – Senior citizens born prior to 1946 (or the unremarried surviving spouse of a decedent born prior to 1946 who also died after reaching age 65) may subtract interest, dividends, and capital gains included in AGI. This subtraction is limited to a maximum of $12,697 on a single return or $25,394 on a joint return, less any deduction for retirement benefits. (See page 16 in the MI-1040 Instruction Booklet)
- Line 25: Tier 3 Michigan Standard Deduction. Taxpayers who were born during the period January 1, 1953 through January 1, 1956, and reached the age of 67 on or before December 31, 2022, may be eligible for a Tier 3 Michigan Standard Deduction. This deduction is up to $20,000 for a return filed as single or married filing separately, or up to $40,000 for a married filing jointly return. Exemption(s) claimed on MI-1040, lines 9a and 9d, taxable Social Security benefits, military compensation (including retirement benefits), Michigan National Guard retirement benefits and railroad retirement benefits included in AGI may reduce the amount eligible to be claimed on this line. To determine your deduction, complete Worksheet 2.
- Pension Schedule (Form 4884):
- Who may Claim a Pension Subtraction?
- TIER 1
Taxpayers born before 1946 may subtract qualified private pensions up to $56,961 for single or married filing separately filers and $113,922 for joint filers.
- TIER 2
Taxpayers born January 1, 1946 through December 31, 1952 should not file Form 4884. A single filer may subtract $20,000 against all income and joint filers may subtract $40,000 against all income as the Tier 2 Michigan Standard Deduction on Schedule 1, line 23.
Taxpayers who receive retirement benefits from employment with a governmental agency exempt from Social Security may deduct up to $35,000 against all income for a single filer and $55,000 for joint filers. If both spouses on a joint return receive Social Security exempt retirement benefits, a standard deduction of $70,000 is allowed.
Surviving spouses who were born after 1945 and have reached the age of 67, have not remarried, and claimed a subtraction for retirement and pension benefits on a return jointly filed with the decedent in the year they died, may elect to the take the larger of the retirement and pension benefits deduction based on the older deceased spouse’s year of birth subject to the limits available for a single filer or the survivor’s Michigan Standard Deduction.
- TIER 3
Taxpayers born January 1, 1953 through January 1, 1956 should not file Form 4884. Instead, taxpayers may be eligible for a Tier 3 Michigan Standard Deduction. This deduction is up to $20,000 for a return filed as single or married filing separately, or up to $40,000 for a married filing jointly return. Exemption(s) claimed on MI-1040, lines 9a and 9d, taxable Social Security benefits, military compensation (including retirement benefits), Michigan National Guard retirement benefits and railroad retirement benefits included in AGI may reduce the amount eligible to be claimed on this line. To determine your Tier 3 Michigan Standard Deduction on Schedule 1, line 25, complete Worksheet 2 in the MI-1040 booklet.
Surviving spouses who were born after 1945 and have reached the age of 67, have not remarried, and claimed a subtraction for retirement and pension benefits on a return jointly filed with the decedent in the year they died, may elect to the take the retirement and pension benefits deduction based on the older deceased spouse’s year of birth subject to the limits available for a single filer or the survivor’s Michigan Standard Deduction.
Taxpayers born after January 1, 1956 but before January 2, 1961 who have reached age 62 and receive retirement benefits from employment with a governmental agency exempt from Social Security may deduct up to $15,000 in qualifying retirement and pension benefits. If both spouses on a joint return receive Social Security exempt retirement benefits, the maximum deduction increases to $30,000. See Form 4884, line 18 instructions for more information.
Taxpayers born after January 1, 1956 who receive retirement benefits from a governmental agency exempt from Social Security and were retired as of January 1, 2013 may deduct up to $35,000 in qualifying pension benefits if single or married filing separately or $55,000 if married filing jointly. If both spouses on a joint return qualify, the maximum deduction increases to $70,000.
All other taxpayers born after January 1, 1956, all retirement and pension benefits are taxable and are not entitled to a pension subtraction.
- Surviving 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. For more information, see instructions.
- For more information, see:
- TIER 1
- Who may Claim a Pension Subtraction?
- Homestead Property Tax Credit
- Line 9 – Taxable Value $143,600
- Line 33 – Total Household Resources $63,000
- The homestead property tax credit phase-out begins when your total household resources exceed $54,000.
- Maximum Property Tax credit allowed $1,600
- Home Heating Credit (MI-1040CR-7):
- Line 42 – Maximum heating costs $3,430
- Line 47 – Home Heating Credit. Multiply line 46 by 90%
Note: The last day to file a 2022 Home Heating Credit is September 30, 2023. No filing extensions are allowed.
TABLE A: 2022 Home Heating Credit (MI-1040CR-7) Standard Allowance
NOTE: If you lived in your homestead for less than 12 months, you must prorate your standard allowance. (see instructions in the MI-1040CR-7 booklet).
EXEMPTIONS STANDARD ALLOWANCE INCOME CEILING 0-1 $524 $14,957 2 $706 $20,157 3 $888 $25,357 4 $1,069 $30,528 5 $1,251 $35,729 6 $1,433 $40,929 +182 for each exemption over 6 + $5,200 for each exemption over 6 TABLE B: 2022 Home Heating Credit (MI-1040CR-7) Alternate Credit Computation
Exemptions and Maximum Income for the Alternate Credit Computation
EXEMPTIONS MAXIMUM INCOME 0-1 $16,387 2 $22,051 3 $27,720 4 $30,364 - New Tax Treatment of Wagering Losses for Casual Gamblers Under the Michigan Income Tax Act