Can You Collect Unemployment and Social Security in Michigan?

You can collect unemployment and Social Security in Michigan at the same time, but your unemployment check may be reduced because of a pension offset built into state law. The maximum weekly unemployment benefit in Michigan for 2026 is $530, and that figure can shrink, sometimes to zero, once Social Security is factored in.¹ Your Social Security payment, on the other hand, is not reduced by unemployment at all.

How Michigan’s Pension Offset Works

Michigan’s Employment Security Act, Section 421.27(f), lets the Unemployment Insurance Agency (UIA) reduce your weekly unemployment benefit when you also receive retirement income, including Social Security. The reduction depends on whether the employer being charged for your unemployment claim contributed to the retirement plan you are drawing from.²

Federal law backs this up. States are required to reduce unemployment compensation by the amount of any government pension attributable to a given week when the base-period employer contributed to that plan.³ Federal law also lets states soften the offset to reflect what you paid in yourself.

When you file, the UIA looks at which employer is being charged, what retirement income you report, and how much of that income the employer funded. The exact dollar reduction comes out of that review.

What Kind of Social Security Are You Receiving?

The offset lands differently depending on which Social Security program sends your check.

Retirement Benefits

Employers pay half of your FICA taxes, so your base-period employer is generally treated as a contributor to Social Security. That means your unemployment benefit can be reduced by the weekly equivalent of your Social Security retirement income.² If your Social Security retirement payment is larger than your weekly benefit rate, you may receive no unemployment for the weeks charged to that employer.

Because you paid the other half of FICA yourself, Michigan may calculate the offset on only the employer-funded portion of your Social Security.³ How much that softens the reduction depends on your situation.

Social Security Disability Insurance

SSDI is funded through the same employer FICA contributions, so it sits inside the same offset framework as retirement benefits.³ There is also a built-in tension between the two programs that goes beyond the dollar math. SSDI requires that you cannot perform substantial gainful activity. Unemployment requires that you are able to work and are actively looking. The two agencies evaluate those criteria on their own, but a claim for both benefits can draw a closer look from either side.

Supplemental Security Income

SSI is a needs-based program, not a work-funded pension. No employer contributes to it, so it does not trigger Michigan’s pension offset. The pressure runs the other way: unemployment income counts toward the income limits SSI uses, so collecting unemployment can reduce or end your SSI payments.

Unemployment Does Not Reduce Your Social Security

The offset only runs in one direction. Unemployment benefits are not counted as earned income under Social Security’s rules, and the Social Security Administration has stated directly that unemployment does not affect retirement benefits.⁴

This matters if you claimed Social Security before full retirement age. In 2026, Social Security withholds $1 for every $2 you earn above $24,480 per year, or $2,040 per month, if you are under full retirement age.⁵ Unemployment is excluded from that earnings test. If you stop working and start drawing unemployment, your Social Security check keeps coming without a reduction for that income.

Taxes When You Collect Both

Both benefits can be taxable, and receiving them together makes it easier to cross the thresholds that make Social Security itself taxable.

Federal Tax

Unemployment is fully taxable as ordinary income at the federal level.⁶ Social Security starts becoming partially taxable once your “combined income” passes $25,000 for single filers or $32,000 for joint filers. Combined income is your adjusted gross income plus any tax-exempt interest plus half of your Social Security benefits. Up to 85 percent of your Social Security can end up taxable at the higher end.⁷

The pile-up catches people off guard. Your unemployment flows into your adjusted gross income, which pushes up the combined income number used to tax Social Security. Someone receiving $15,000 in unemployment and $20,000 in Social Security sits at a combined income of at least $25,000, right at the single-filer threshold. Any other income on top makes a slice of Social Security taxable that might have escaped tax otherwise.

Michigan Tax

Michigan applies its flat income tax to unemployment benefits. For tax years 2026 through 2028, Michigan provides a temporary deduction for Social Security income for taxpayers born after 1952 who have reached age 67, allowing them to subtract both their Social Security income and a full standard deduction from state taxable income.⁸ The deduction is set to expire after 2028. Residents younger than 67 or born before 1953 fall under different retirement income deduction rules.

Withholding

You will receive Form 1099-G for your unemployment and Form SSA-1099 for your Social Security.⁹¹⁰ You can elect withholding on both. Unemployment can be set at 10 percent, requested when you file your claim or during the benefit year. For Social Security, file IRS Form W-4V to withhold at 7, 10, 12, or 22 percent. Setting both up is the simplest way to avoid a surprise in April.

If the UIA Applies an Offset You Disagree With

You can protest or appeal a UIA determination, including one that reduces your benefit for a pension offset. You have 30 days from the mail date printed on the written determination to file. The clock runs from when the notice was mailed, not when it reached you, so watch your mail during the claims process.¹¹

Once the UIA receives your appeal, it forwards the case to the Michigan Office of Administrative Hearings and Rules. An Administrative Law Judge schedules a telephone hearing and mails you the date, time, and call-in information. You can present evidence and testimony at the hearing, and UIA staff may participate. The ALJ issues a written decision afterward, and in some cases decides on the written record without a hearing.¹²

Missing the 30-day window is the costliest mistake in the process. Past that date, your only path is persuading an ALJ you had good cause to file late, which is harder to win than the underlying appeal.¹²

1
State of Michigan. Unemployment Weekly Benefit Rate Increases Jan. 1, 2026
2
Michigan Legislature. MCL 421.27
3
Office of the Law Revision Counsel. 26 U.S. Code 3304 – Approval of State Laws
4
Social Security Administration. Will Unemployment Benefits Affect My Social Security Benefits?
5
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
6
Internal Revenue Service. Unemployment Compensation
7
Social Security Administration. Must I Pay Taxes on Social Security Benefits?
8
State of Michigan. Revenue Administrative Bulletin 2026-1
9
Internal Revenue Service. About Form 1099-G, Certain Government Payments
10
Social Security Administration. Get Tax Form (1099/1042S)
11
State of Michigan. Protest and Appeals Process
12
State of Michigan. How the Appeal Process Works