The tax on retirement income was first rolled out as one of the ways to help finance a $1.5 billion tax reduction on businesses. Some people could be feeling the pinch for the first time as they file taxes this year.
"It's not just for pensions, it's for any retirees," said Sen. Rick Jones, R-Grand Ledge, who introduced a bill to repeal this tax.
It's a tax on retirees under the age of 67 and lawmakers on both sides of the isle want it gone. Republicans introduced a bill and Democrats asked for it as part of their "Middle Class Plan."
"I had many people tell me how can I live on $100 less a month when I'm retired and I can't work," said Rep. Andy Schor, D-Lansing.
So far, getting the tax removed is an uphill battle that seems near impossible. Gov. Snyder is against repealing it. His Director of Strategy, Bill Rustem, says it's unfair to shift the tax burden onto the younger generation.
"We were driving young people, businesses and entrepreneurs out of the State of Michigan in the old system," Rustem said.
He called the previous system of near tax free retirement income a model that's rewarding the past and punishing the future. Consensus revenue estimates show that the new tax is generating more than $330 million per year for the state. So far, lawmakers haven't offered alternatives.
"Well it's a work in progress, I think we could've done it differently," said Sen. Jones.
"House Democrats are going to put out our priorities for that coming up in the next few weeks as we work on the budget," said Rep. Schor.