LANSING, Mich. — Sen. Rick Jones and Rep. Tom Barrett have introduced legislation to repeal the pension tax.
“I think it is extremely unfair for people who planned for their retirement to suddenly, in the midst of their retirement, get hit with a new tax,” said Jones, R-Grand Ledge. “I am proud to be working with Representative Tom Barrett to stand up for our retirees by repealing the cruel pension tax.”
Senate Bill 41 would repeal the 2011 reform, commonly known as the pension tax, which introduced a tiered structure for taxing retired public employee pensions.
Barrett, R-Potterville, has introduced House Bill 4052 to also repeal the tax.
“It was unfair to institute a new tax on retirees once they were on a fixed income,” Jones said. “Our seniors could not have foreseen the change, and it was too late for many of them to go back to work. Many seniors tell me they are taking up legal residence in other states to avoid the tax.”
Under the pension tax, retirees born before 1946 are still exempt from the income tax and seniors born before 1952 have limited deductions. Jones said that the tiered structure could result in two retirees being taxed at different amounts due to an age difference of just a few days.
“It is fundamentally unfair to tax our retirees in a way that they could not anticipate throughout their working careers,” Barrett said. “Our seniors deserve better than this tax on their already reduced income.”
SB 41 has been referred to the Senate Finance Committee for consideration, and HB 4052 has been referred to the House Tax Policy Committee for consideration.