Michigan veteran taxes

Military retired pay in Michigan

Exempttax year 2025Sources 1, 2, 3

Michigan exempts military retirement benefits paid to retirees of the U.S. armed forces for services performed while a member; they are deducted on Schedule 1 to the extent included in adjusted gross income (MCL 206.30(1)(e)). In the tax year 2025 MI-1040 instructions they go on Schedule 1, line 11, separately from the age-based pension subtraction, with no age, cap or income test.

Survivor Benefit Plan annuities

Check with the stateSources 4, 5, 6

The Department of Treasury states that Michigan does not tax military survivor benefits that are not included in adjusted gross income, and that surviving spouse benefits classified as military compensation or military retirement pay may be deducted to the extent they are included in adjusted gross income; its military retirement answer adds that in the case of death the surviving spouse may claim the subtraction. Treasury’s pages and the tax year 2025 MI-1040 instructions do not say whether Survivor Benefit Plan annuities are classified as military retirement pay.

Property tax relief for disabled veterans

Exemption or creditSources 7, 8, 9

Michigan fully exempts from property taxes the homestead used and owned by a resident disabled veteran discharged under honorable conditions who has been determined by the U.S. Department of Veterans Affairs to be permanently and totally disabled as a result of military service and entitled to benefits at the 100% rate, has been rated individually unemployable, or has received VA assistance for specially adapted housing (MCL 211.7b). The application, on the State Tax Commission’s form, goes to the local assessing officer after January 1 and before December 31 of the year claimed; an exemption granted for taxes levied on or after January 1, 2025 stays in effect without reapplication until rescinded or denied.

• The veteran must hold title alone or jointly with the veteran’s spouse; a surviving spouse must hold title alone.
• Taxes for the current year are canceled from the year the eligible veteran acquires title, with proration for a partial year.

Vehicle registration for disabled veterans

Fee waiver or discountSources 10, 11, 12

Michigan issues a special registration plate with the letters “DV” and the words “disabled veteran” for a private passenger vehicle owned by an honorably discharged disabled veteran (MCL 257.803f). For a totally disabled veteran, meaning one with a VA service-connected total or permanent total disability rating for compensation (or that rating plus disability retirement pay from a branch of the Armed Forces), the plate is exempt from the vehicle registration tax and no service fee is charged on application or renewal. Veterans rated at least 50% can also get the plate, but the statute’s tax exemption applies only to the totally disabled veteran’s plate.

• The Michigan Veterans Affairs Agency says a veteran with a total and permanent disability rating may register one passenger vehicle with the plate at no fee, with a one-time $5 administrative fee when the plate is first issued.
• The surviving spouse of a disabled veteran rated at least 50% may keep using and renew the plate (MCL 257.803f(6)).