L&HMIeasy
A 55-year-old MI resident takes a non-qualified annuity withdrawal of taxable gain. What additional Michigan surtax applies on top of the 10% federal early-withdrawal penalty?
No additional Michigan surtax applies
BA 2.5% MI annuity surtax
CA 5% MI early-withdrawal surtax
DA 10% MI matching surtax on top of the federal penalty
Why this is the answer
Michigan does not stack a state-level early-withdrawal surtax on top of the federal IRC 72(q)/(t) 10% penalty for premature distributions from an annuity. Only the federal penalty and ordinary income tax on the gain apply.
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