Not true.  MI does NOT have an exclusion for unemployment. MI will withhold both Federal and MI state tax from unemployment.  MI does use the Federal AGI as starting point for calculation of MI tax and there are some subtractions from the AGI.  Unemployment is not one of the subtractions allowed except for railroad unemployment benefits.  (See MI instructions, pg 14 Misc subtractions)..  I've scoured the MI web site earlier today 3/18, and don't see any mention of adding back the Federal waived unemployment amount.  Still looking for any mention on the MI site.  

https://www.michigan.gov/documents/taxes/CC-41011_608354_7.pdf