Military Retirement in Michigan
Complete 2026 Tax Guide for Veterans
$6,250+ Retirement Exemption
Based on birth year (higher for older retirees)
Quick Facts: Michigan for Military Retirees
Michigan Military Retirement Tax Overview
How Michigan Taxes Military Retirement (2026)
Michigan's taxation of military retirement pay depends primarily on your birth year. The state uses a tiered system that provides more generous exemptions for older retirees:
Born Before 1946
Full exemption on all retirement income including military retirement
Born 1946-1952
Up to $61,518 (single) or $123,036 (joint) exemption on all retirement income
Born 1953-1966
Up to $20,000 (single) or $40,000 (joint) exemption, increasing as you age
Born 1967 or Later
Standard personal exemption of $5,600 per person applies; retirement income taxed at 4.25%
2026 Tax Calculation Example
An E-7 with 20 years retiring in 2026 (born 1968) receives ~$2,550/month ($30,600/year) in military retirement. After the standard $5,600 exemption: $25,000 x 4.25% = $1,062.50 state tax. Compare to states with full exemption where tax would be $0.
Michigan Veteran Property Tax Exemptions
100% Disabled Veterans
Complete property tax exemption on primary residence for veterans rated 100% disabled or receiving Individual Unemployability (IU)
Homestead Property Tax Credit
All homeowners (including veterans) may claim up to $1,700 credit if property taxes exceed 3.2% of income. Veterans with disabilities receive enhanced benefits.
Surviving Spouse Exemption
Unremarried surviving spouses of service members who died in service or from service-connected disabilities may receive full property tax exemption
Principal Residence Exemption
18 mill (1.8%) exemption on school operating taxes for primary residence - available to all Michigan homeowners
Military Installations in Michigan
Selfridge Air National Guard Base
Harrison Township (Metro Detroit)
- - Home of 127th Wing (A-10 Thunderbolts)
- - Joint military-civilian airport
- - One of oldest continuously operating bases
- - Defense contractor opportunities nearby
Camp Grayling
Grayling, Northern Michigan
- - Largest National Guard training facility in US
- - 147,000+ acres of training area
- - Year-round training operations
- - Joint multi-component exercises
Detroit Arsenal
Warren, Michigan
- - U.S. Army TACOM Life Cycle Management
- - Ground vehicle research & development
- - Major defense contractor hub
- - 20,000+ military/civilian employees
Battle Creek ANGB
Battle Creek, Michigan
- - Home of 110th Wing (MQ-9 Reapers)
- - Air National Guard operations
- - Growing drone mission capabilities
- - Defense Finance & Accounting Service
Michigan Cost of Living for Retirees
Cost Breakdown
- Overall Cost of Living 5% below average
- Median Home Price $240,000
- Property Tax Rate 1.54% average
- Sales Tax 6%
- Average Rent (2BR) $1,100/month
Regional Variations
- Metro Detroit: Above average costs, best job market
- Grand Rapids: Growing economy, moderate costs
- Lansing Area: Affordable, state government jobs
- Upper Peninsula: Very affordable, rural lifestyle
- Ann Arbor: Higher costs due to university
Education Benefits for Michigan Veterans
Michigan Reconnect Program
Free community college tuition for Michigan residents age 25+ who don't have a college degree. Available to veterans and their families.
In-State Tuition for Veterans
All veterans qualify for in-state tuition at Michigan public colleges regardless of previous residency, under the Veterans Choice Act compliance.
Michigan Veterans Trust Fund
Emergency financial assistance for veterans and families including grants for education, housing, medical expenses, and other needs.
Children of Veterans Tuition Grant
Tuition grants for children of 100% disabled veterans or those who died in service. Up to $2,800/year at eligible Michigan colleges.
Futures for Frontliners
Free tuition at community colleges for essential workers - many veterans qualified through healthcare and emergency services work.
Best Michigan Cities for Military Retirees
1. Grand Rapids
Growing economy, excellent healthcare, family-friendly
2. Warren/Metro Detroit
Near Detroit Arsenal, defense contractor jobs, Selfridge ANG
3. Battle Creek
Air National Guard base, DFAS, very affordable housing
4. Traverse City
Beautiful lakefront living, outdoor recreation, growing economy
VA Healthcare in Michigan
VA Medical Centers
- John D. Dingell VAMC - Detroit
- Battle Creek VAMC - Battle Creek
- VA Ann Arbor Healthcare System - Ann Arbor
- Aleda E. Lutz VAMC - Saginaw
- Oscar G. Johnson VA - Iron Mountain
Community-Based Clinics
30+ community-based outpatient clinics throughout Michigan including:
- - Grand Rapids, Lansing, Flint
- - Traverse City, Marquette, Gaylord
- - Jackson, Kalamazoo, Muskegon
- - Yale, Pontiac, Gaylord
Michigan VA Healthcare Rating: Good
5 medical centers ensure most veterans are within 60 miles of comprehensive care. Ann Arbor VAMC is a teaching hospital with the University of Michigan.
Pros & Cons of Retiring in Michigan
✅ Pros
- ✓ Affordable housing and cost of living
- ✓ Beautiful Great Lakes scenery and recreation
- ✓ Defense contractor jobs (Detroit Arsenal)
- ✓ Good VA healthcare coverage statewide
- ✓ Four distinct seasons
- ✓ Strong education benefits
- ✓ No tax on VA disability
❌ Cons
- ✗ Limited military retirement exemption for younger retirees
- ✗ High property taxes in many areas
- ✗ Harsh winters with significant snow
- ✗ Limited active-duty military presence
- ✗ Auto insurance is expensive
- ✗ Some areas have declining economies
Frequently Asked Questions
Does Michigan tax military retirement pay?
Yes, but with exemptions based on birth year. Those born before 1946 get full exemption. Born 1946-1952: up to $61,518/$123,036 exemption. Born 1953-1966: up to $20,000/$40,000 exemption. Younger retirees receive standard personal exemptions only.
Is Michigan a good state for military retirees?
Michigan offers affordable living, good VA healthcare, and defense contractor jobs, but limited tax benefits for younger retirees. Best for those who want Great Lakes lifestyle, enjoy four seasons, and prioritize cost of living over tax exemptions.
What's the property tax situation in Michigan?
Michigan has above-average property taxes (1.54% average), but 100% disabled veterans receive full exemption. The Homestead Property Tax Credit can provide up to $1,700 relief for eligible homeowners.
Where should military retirees live in Michigan?
For defense jobs: Warren/Metro Detroit area near Detroit Arsenal and Selfridge. For affordability: Battle Creek or Lansing. For quality of life: Grand Rapids or Traverse City. For outdoor recreation: Northern Michigan or Upper Peninsula.
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