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12902: MI - New Deduction for Taxpayers Born after 1946


What is the MI-1040 Standard deduction?
Beginning in 2013 a standard deduction is available on Schedule 1, Additions and Subtractions, for taxpayers born between 1946 and 1952. The taxpayer gets a $20,000 ($40,000 if MFJ) deduction that can be applied against any type of income. The taxpayer does not need to have pension income to qualify for this deduction; the taxpayer (or spouse if filing jointly) only needs to have been born between 1946 and 1952.

If the taxpayer received any military pay, the standard deduction is reduced by the amount of military pay.

  • If a W2 has an M or N in the Special tax treatment field; this is reported on Schedule 1 line 14. 
  • If a 1099 has a Pension Type of M or RRB has been reported on the federal return, this is reported on Schedule 1 line 11

The Michigan MI-1040 instructions for Schedule 1 explain the deduction:

"Line 23: Tier 2 Michigan Standard Deduction. If the older of you or your spouse (if married filing jointly) was born during the period January 1, 1946 through December 31, 1952, and reached the age of 67 on or before December 31, 2020, you are eligible for a deduction against all income and will no longer deduct retirement and pension benefits. The deduction is $20,000 for a return filed as single or married filing separately, or $40,000 for a married filing jointly return. If you checked either box 22C or 22G your standard deduction is increased by $15,000. If you checked both boxes 22C and 22G your standard deduction is increased by $30,000.

The standard deduction is reduced by any amounts reported on line 11 and any military pay included on line 14.

In most cases, taxpayers who are eligible to complete line 23 should not complete lines 24, 25, or 26. However, if a taxpayer is the unremarried surviving spouse of a decedent born prior to 1946 who also died after reaching age 65, check the box below line 26 to claim the Tier 2 Michigan standard deduction on line 23 and a dividend/interest/capital gains deduction for investment income on line 26 (if applicable)."

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