Credit unions in Michigan will have to handle individual retirement account calculations differently when two state laws go into effect on Oct. 1.
According to the Michigan Credit Union League & Affiliates, the Public Act 223 of 2012, signed into law on June 26 by Gov. Rick Snyder, decreases the income tax rate from 4.35 % to 4.25%.
Snyder also signed the Public Act 224 of 2012, a bill that increases the personal and dependency exemption for personal income tax payers up to $3,950 per exemption, the league said.
As a result, calculating the withholding tax for IRA withdrawals and distributions will be affected. Michigan also mandated income tax on retirement income, pensions and IRA distributions.
The Michigan league said when the new tax on retirement earnings was implemented, taxes were based on a tax rate of 4.35% and a personal exemption option of $3,700.
The reduction in the income tax rate and the increased exemption amount will benefit Michigan taxpayers and reduce their tax burden, according to the league.
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