It’s Time to Make Things Right with the Retirement Tax

AARP mobilizes members to push for tax repeal

AARP, the nation’s largest nonprofit, nonpartisan organization dedicated to empowering people 50 and older, wasted no time today in calling upon Michigan’s newly-seated Legislature to repeal the state’s onerous retirement tax.

Enacted through Public Act 38 of 2011, the retirement tax of 4.25% was created to help fill a $930 million budget shortfall that weighed upon the state in the wake of the Great Recession. The impact of the tax, however, placed an unanticipated burden on an already financially vulnerable population. According to national data, the median annual income for a Medicare beneficiary (65 and older) is $26,000. From that modest income, housing and food costs in Michigan carve out nearly $11,000, according to the Massachusetts Institute of Technology living wage calculator. This older population demographic also endures the highest medical costs and prescription drug costs of any other age demographic.

“Our state did a shameful thing when it pulled the rug out from under a large swath of Michiganders already on fixed incomes who worked hard, played by the rules and paid their dues to retire with dignity,” said Paula D. Cunningham, ARRP Michigan State Director.  “These Michiganders believed their retirement income would not be diminished by taxes, but they were betrayed, forcing many to go back to work or delay retirement. And to this day, it continues to impact new waves of retirees, including the recent surge of COVID-19 retirees. Enough is enough. It’s time to remove this tax burden from the backs of our retirees.”

As a fierce advocate and defender of those 50 and older, AARP has fought Michigan’s retirement tax from the start. With a new Legislature in place, AARP is calling upon all Michiganders, including its nearly 1.3 million members, to urge legislators to vote YES to repeal it.  


For media inquiries: Cathleen Simlar, csimlar@aarp.org.