A PENSION THAT WAS EARNED AND IS PAYABLE ON ACCOUNT OF A PERSON’S EMPLOYMENT WITH A GOVERNMENTAL AGENCY THAT WAS NOT COVERED BY THE FEDERAL SOCIAL SECURITY ACT (42 USC 901 ET SEQ.) IS EXEMPT FROM TAXATION UNDER THIS ACT TO THE FOLLOWING EXTENT:

(A) THE FIRST $34,000 FOR A SINGLE FILER;
(B) THE FIRST $54,000 FOR A JOINT FILER OR A FILER WITH 1 OR MORE DEPENDENTS.
(C) INCOME EARNED FROM A DUTY-RELATED DISABILITY
(D) INCOME DERIVED FROM A SURVIVOR’S DEATH BENEFIT

NOTE:

Approximately 72% of public safety officers in Michigan work for public employers in positions where their employment is not covered by the Social Security Act as the result of exemptions which were invoked years ago when the Social Security Act was first passed. Hence, these employees are not eligible for Social Security benefits unless they establish independent eligibility by attaining at least 40 quarters of sufficient earnings from employment covered by Social Security (typically acquired, if at all, before or after their employment as a public safety officer).

Even when these retired officers (or their surviving spouses) are eligible for Social Security benefits on account of the other covered employment, their Social Security benefits are offset and reduced by these public pensions under complex formulas contained in the Social Security Act: (1) the windfall elimination provision (WEP), affecting the retired public safety officer; and (2) the government pension offset (GPO), affecting the surviving spouse of the public safety officer if the spouse is receiving a pension benefit on account of the public safety officer’s death.

The State of Michigan is not seeking to tax Social Security benefits, but would tax public pensions. This amendment protects persons whose Social Security benefits will be or are being reduced and offset by what would now become taxable income in Michigan (i.e., the public pension earned from employment not covered by Social Security).