I've been getting quite a few questions regarding recent changes to some Michigan retiree pensions, and I'd like to take time to explain our new state laws.

Last year the Legislature voted to eliminate Michigan's old business tax and replace it with a flat tax to help small family businesses hire more workers and improve the economy. The landmark tax reform plan, which took effect this month, will help small businesses thrive and create jobs for Michigan families.  We needed a more fair, simple and efficient tax structure, and took a huge step forward economically with the new plan.

Part of the tax plan involved eliminating an exemption on some retiree pensions, which minimally reduced income for some Michigan residents who receive pensions. It's important to note, though, that Michigan retirees who turn 67 this year and older will see no changes in their pensions. This means a huge percentage of currently retired Michigan residents will not be affected.

Many people may not realize that Michigan was one of only a handful of states that exempted pensions from taxation in the first place. Our plan treats the income of retirees just like that of working seniors.

Retirees with smaller pensions also will not be affected. People who are between 60-66 whose pensions are $20,000 or lower, or $40,000 or lower for a couple, also will see no decrease in their pension benefits due to the plan. 

The majority of retirees who are affected either have pensions that pay out more than $40,000 per couple, or who have retired in their 40s or 50s. Many people in these age brackets who retire invariably get other jobs, either part-time or full-time, which can supplement their pension checks.

The Legislature also gave all Michigan taxpayers earning less than $75,000 (or $150,000 if filing jointly) an exemption of $3,700 as well as the additional $20,000 (or $40,000 if filing jointly) for all retirees born after 1946. Recently, the Supreme Court ruled that while taxing pensions is constitutional, the $75,000 cap created a graduated income tax and was therefore unconstitutional. Consequently, these exemptions will be given to all taxpayers, regardless of how much income they have. 

It's also important to point out that residents who receive Social Security income and military pensions will not see a change in their pension exemptions.

The plan is about creating jobs for Michigan families while safeguarding Michigan's seniors, low income families and small businesses.

The plan is a long-term solution to Michigan's structural failures. We are making tough, necessary decisions to put this state on the path to recovery. As always, please give my office a call if you have further questions about the tax reform plan.

Rep. Mark Ouimet is the state representative for the 52nd District. He can be reached toll free at 1-855-627-5052 or email markouimet@house.mi.gov