Michigan legislature OKs tax cut for retired police, firefighters

Senate approved the bill unanimously

By DAVID EGGERT, Associated Press
Headline Goes Here

The Michigan Capitol Building in Lansing

LANSING, Mich. - State lawmakers sent Gov. Rick Snyder legislation Tuesday to give an income tax break to an estimated 800 retired Detroit police and firefighters who have been paying higher taxes under a contentious 2011 law that eliminated or reduced exemptions from the taxation of retirement income.

The bill also would benefit hundreds of retirees from the Michigan State Police. No specific estimate was immediately available.

The measure would allow the retirees, who were not part of Social Security in their government employment, to deduct more of their pension income from being taxed if they were born after 1952 and were retired as of Jan. 1, 2013.

"After spending decades keeping Michigan safe, public safety employees have earned the right to keep more of their own money in retirement," the bill sponsor, Republican Rep. Joseph Bellino of Monroe, said in a statement.

The Senate approved the bill unanimously, months after it won House passage on a 94-12 vote. Legislators approved a similar fix for other retirees in 2012.

Don Taylor, president of the Retired Detroit Police and Fire Fighter Association, said those who would benefit from the legislation were originally included in the 2012 "cleanup" bill, but changes led to some retirees being "left behind."

Until the Republican governor took office, Michigan exempted all Social Security and public pension benefits from income taxes, as well as up to $45,000 in private pensions, IRAs and annuities for a single return and about $90,000 for a joint return. Those with 401(k)s were taxed on a portion of their distributions.

Arguing that retirees needed to pay their share rather than push the burden onto younger residents, Snyder and GOP lawmakers in 2011 enacted a three-tiered system over objections from Democrats:

- Anyone born before 1946 has seen no big change.

- Anyone born from 1946-52 has some of their retirement income exempted from taxation. The ceiling is $20,000 for single filers and $40,000 for joint filers and includes money from public and private pensions, 401(k)s and IRAs.

- Anyone born after 1952 has their retirement income, except Social Security and other specific pensions, taxed the same as other income.

The bill would reduce state revenue by about $2.6 million a year, according to the nonpartisan Senate Fiscal Agency. It would not apply retroactively.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.