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 payment may be reduced because of the Social Security income you receive. Social Security itself is not reduced by unemployment. The maximum weekly unemployment benefit in Michigan for 2026 is $530, and a pension offset can eat into that amount depending on which type of Social Security you get and which employer is being charged for your claim.¹

Why Social Security Can Reduce Your Unemployment

Michigan’s Employment Security Act includes a pension offset. Under Section 421.27(f), unemployment benefits are reduced by retirement income when the employer charged for your unemployment claim also contributed to the retirement plan you are drawing from.² Federal law backs this up by requiring states to reduce unemployment compensation by the amount of any government pension attributable to that week when a base-period employer contributed to the plan.³

Employers pay FICA taxes that fund Social Security. That is the link that pulls Social Security into the pension offset: your base-period employer is generally treated as a contributor to the Social Security plan you are drawing from.

Federal law does allow states to limit the reduction to reflect the employee’s own contributions. Because you pay half of Social Security taxes through your own FICA withholding, the offset may be calculated on only the employer-funded portion of your benefits.³ The exact reduction depends on your circumstances. When you file, the UIA works out how the offset applies based on which employer is charged and what retirement income you report.

How Each Type of Social Security Is Treated

Social Security Retirement Benefits

Retirement benefits trigger the pension offset. When the employer being charged contributed to Social Security through FICA (which nearly all covered employers do), your weekly unemployment payment is reduced by the weekly equivalent of your Social Security retirement income.² If your Social Security retirement amount exceeds your weekly benefit rate, you could lose unemployment entirely for the weeks charged to that employer.

Social Security Disability Insurance

SSDI is also partly funded by employer FICA contributions, so it falls under the same pension offset framework as retirement benefits.³

Collecting SSDI alongside unemployment also creates a definitional problem. SSDI requires that you cannot perform substantial gainful activity, defined in 2026 as earning more than $1,690 per month for non-blind individuals.⁴ Unemployment requires that you are able to work and actively seeking a job. The UIA and SSA apply their own criteria independently, but claiming both can invite scrutiny from either agency.

Supplemental Security Income

SSI works differently. It is a needs-based program, not a pension tied to your work history, and no employer contributes to it. That means SSI does not trigger the pension offset under Michigan unemployment law. The interaction runs the other way: unemployment income counts toward the income limits used to determine SSI eligibility, so receiving unemployment can reduce or eliminate your SSI payments.

Unemployment Does Not Reduce Your Social Security

The offset only works in one direction. Unemployment benefits do not count as earned income under Social Security rules, and the SSA has stated directly that unemployment benefits do not affect retirement benefits.⁵

This matters most if you claimed Social Security before full retirement age and are subject to the retirement earnings test. In 2026, Social Security withholds $1 in benefits for every $2 you earn above $24,480 per year ($2,040 per month) if you are under full retirement age.⁶ Unemployment benefits are excluded from that calculation. If you stop working and start collecting unemployment, your Social Security payments will not be reduced by the earnings test during that period.

Taxes on Both Benefit Streams

Collecting both benefits together makes it easier to cross the income thresholds that trigger taxes on Social Security.

Federal Taxes

Unemployment benefits are fully taxable as ordinary income at the federal level.⁷ Social Security becomes partially taxable once your “combined income” exceeds $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.⁸ At the higher end, up to 85 percent of your Social Security can become taxable.

Here is why this catches people off guard. Unemployment benefits flow into your adjusted gross income, which pushes up the combined income figure used to tax Social Security. Someone who received $15,000 in unemployment and $20,000 in Social Security has a combined income of at least $25,000 ($15,000 AGI plus $10,000 representing half of Social Security), right at the single-filer threshold. Add any other income and part of your Social Security becomes federally taxable when it might have been tax-free otherwise.

Michigan Taxes

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.⁹ The deduction is set to expire after the 2028 tax year. Michigan residents younger than 67 or born before 1953 fall under different deduction rules for retirement income.

Withholding

You will receive a Form 1099-G for your unemployment and a Form SSA-1099 for your Social Security.¹⁰¹¹ You can request 10 percent withholding on unemployment when you file your claim or during the benefit year. For Social Security, file IRS Form W-4V to withhold 7, 10, 12, or 22 percent. Setting up withholding on both is the simplest way to avoid a surprise bill in April.

If the UIA Applies an Offset You Disagree With

The UIA sends a written determination explaining any offset or denial. You have 30 days from the mail date on that document to file a protest or appeal. The deadline runs from the date the notice was mailed, not the date you received it.¹²

After the UIA receives your appeal, the case goes to the Michigan Office of Administrative Hearings and Rules. An Administrative Law Judge schedules a telephone hearing and mails a notice with the date, time, and call-in information. You can present evidence and testimony, and UIA staff may participate. In some cases, the judge decides based on the written record without a hearing.¹³

Missing the 30-day deadline is a costly mistake. If you miss it, your only path is convincing a judge that you had good cause for filing late, which is a harder fight than the underlying appeal.¹³

Overpayments From Either Agency

Running two benefit streams raises your odds of an overpayment notice. If the UIA decides it paid you more unemployment than you were entitled to, it will seek repayment. Michigan has historically pursued overpayments aggressively, including through wage garnishment and tax refund intercepts.

On the Social Security side, the SSA recovers overpayments by reducing future benefit payments. You can request a waiver using Form SSA-632 if the overpayment was not your fault and you cannot afford to repay it or believe recovery would be unfair. The SSA reviews your finances as part of the waiver decision.¹⁴ You can also appeal the overpayment itself if the amount is wrong. Acting quickly after any overpayment notice gives you more options than waiting.

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. Substantial Gainful Activity
5
Social Security Administration. Will Unemployment Benefits Affect My Social Security Benefits?
6
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
7
Internal Revenue Service. Unemployment Compensation
8
Social Security Administration. Must I Pay Taxes on Social Security Benefits?
9
State of Michigan. Revenue Administrative Bulletin 2026-1
10
Internal Revenue Service. About Form 1099-G, Certain Government Payments
11
Social Security Administration. Get Tax Form (1099/1042S)
12
State of Michigan. Protest and Appeals Process
13
State of Michigan. How the Appeal Process Works
14
Social Security Administration. Request for Waiver of Overpayment Recovery (SSA-632-BK)