New Michigan Tax Law Requires Withholding from Annuity Payments


Please see our December 7, 2012 Blog Post: "Michigan Amendment Exempts Gift Annuity Payments From Withholding" for important information related to this post.


The State of Michigan revised its Public Act 281 of 1967, amending section 206.703, effective January 1, 2012. This section relates to the withholding of Michigan income taxes from pension and annuity payments. After reviewing the changes, it appears that Michigan charities, and possibly some charities outside Michigan, are required to withhold state tax on the taxable portion of each gift annuity payment made to certain Michigan annuitants. We will continue to monitor this development and provide additional updates as needed.

More information can be found on the website of the State of Michigan. View the 2012 Michigan Pension Withholding Guide or the Frequenty Asked (FAQ) Questions document. On the FAQ document, see question 6 under “Changes to Pension Withholding and Who Will be Affected”).