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Dixon Tax & Payroll LLC PROVIDES ACCOUNTING, PAYROLL AND PERSONAL & SMALL BUSINESS INCOME TAXES

11/17/2025

Issued: November 17, 2025

This Notice explains the recent changes within Public Act (PA) 24 of 2025 that will impact the retirement deduction of certain taxpayers who claim the standard deduction and receive social security.

Background

In Michigan, calculation of an individual’s income tax liability begins with the amount reported by the individual on their federal income tax return as adjusted gross income (AGI). For some taxpayers, AGI may include a portion of their social security (“SSA”) income. Michigan law allows taxpayers to deduct SSA income included in AGI that flows through to the Michigan return.

Michigan law also allows a deduction for qualified retirement and pension benefits, subject to certain limitations. For taxpayers who reach the age of 67, a “standard deduction” may be claimed in lieu of that retirement deduction. The standard deduction is applied to all types of income and is generally limited to $20,000 for single returns and $40,000 for joint returns. For anyone that claims the standard deduction, additional adjustments may apply depending on their year of birth. For anyone born after 1952, the taxpayer is required to offset the standard deduction by the personal exemption amount and — prior to 2025 PA 24 — the amount of the SSA deduction for that year.

Change Made by 2025 PA 24

PA 24 reverses the requirement to offset the standard deduction by the deduction taken for SSA income for taxpayers born after 1952 who have reached the age of 67. This reversal applies for tax years 2026 through 2028. The result is that these taxpayers may receive the benefit of both the standard deduction and the social security deduction in tax years 2026 through 2028.

Taxpayers Impacted by This Change

This change will only impact taxpayers born after 1952 who receive SSA income and claim the standard deduction on their Michigan individual income tax return. It does not impact taxpayers who do not claim the standard deduction on their return, such as taxpayers who elect to deduct their retirement and pension benefits. For information about choosing between the standard deduction and the retirement deduction, please visit Treasury’s retirement webpage, at https://www.michigan.gov/taxes/iit/tax-guidance/tax-situations/retirement-and-pension-benefits.

Example: Taxpayer Gina, a single woman, born March 5, 1953, is age 73 in tax year 2026. Gina earns $23,000 in wages, $5,000 in retirement income, and $12,000 in SSA income in 2026, resulting in total income of $40,000. Gina is eligible for the standard deduction of $20,000 because she has reached age 67. Prior to PA 24, Gina was required to offset the standard deduction by her SSA deduction ($20,000-$12,000), leaving her with $8,000 to apply against her other income of $28,000 and resulting in taxable income of $20,000. As a result of PA 24, Gina can take both the standard deduction of $20,000 and her SSA deduction of $12,000, resulting in taxable income of only $8,000.

Implementation

No other changes to the taxation of retirement income were enacted by PA 24.

10/30/2025

Trump account and new Form 4547. P.L.119-21, commonly known as the One Big Beautiful Bill Act, allows parents, guardians, and other authorized individuals to elect
to establish a new type of individual retirement account,
called a Trump account, for the exclusive benefit of an eligible child. If the child was born after 2024 and before
2029 and meets certain other requirements, the authorized individual may also elect to receive a $1,000 pilot program contribution to the child’s Trump account. Both elections can be made on Form 4547, which can be filed
at the same time as the authorized individual’s 2025 income tax return. For more information on Trump accounts,
and to learn how to make these elections, see Form 4547

12/30/2022

Beginning on Jan. 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

10/15/2022

Individuals and households affected by Hurricane Ian that reside or have a business anywhere in the states of Florida, North Carolina and South Carolina can request additional time to file state of Michigan tax returns and pay state of Michigan tax bills, with penalties and interest waived. The Internal Revenue Service recently announced tax relief for Hurricane Ian disaster survivors.

“A natural disaster can be devastating both personally and financially,” State Treasurer Rachael Eubanks said. “The last thing a hurricane survivor should worry about right now is paying a tax bill. Taxpayers need to focus on their recovery, and there will not be any late penalties or interest if taxpayers need more time to file and pay because of the hurricane. We will get through this challenge together. Taxpayers should reach out to us to learn more about the process for obtaining this relief.”

Individuals unable to meet filing or payment deadlines due to this emergency should contact Treasury at 517-636-4486. Businesses are asked to call 517-636-6925.

In addition, affected taxpayers may write to Treasury to request emergency-related tax relief. When writing, the following must be included in the correspondence:

Name and account number of the individual or business taxpayer.
Reason for the relief request.
Taxpayer address within one emergency area or address of the tax preparer located in the emergency area.
Taxpayers should send the completed correspondence to the following address:

Michigan Department of Treasury
Attn: Disaster Tax Relief
Lansing, Michigan 48922

Some taxpayers may receive a preliminary assessment notice before a tax relief request is formally received by Treasury. Taxpayers within the emergency area who receive these notices should contact Treasury by phone to resolve.

To learn more about Michigan’s tax system, go to

08/10/2022

New school year reminder to educators; maximum educator expense deduction rises to $300 in 2022

WASHINGTON – As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year.

This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax years 2002 through 2021, the limit was $250 per year. The limit will rise in $50 increments in future years based on inflation adjustments.

For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they’re married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?
Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What's deductible?
Educators can deduct the unreimbursed cost of:

Books, supplies and other materials used in the classroom.
Equipment, including computer equipment, software and services.
COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention.
Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.
Qualified expenses don’t include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

Reminder for 2021 tax returns being filed now: Deduction limit is $250
For those who received a tax filing extension or still need to file a 2021 tax return, the IRS reminds any educator still working on their 2021 return that the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.

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3790 Elizabeth Lake Road
Waterford Township, MI
48328

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