LANSING -- Michigan pensioners failed to salvage their longstanding tax break when a divided Michigan Supreme Court gave the green light Friday to impose a 4.35% personal income tax on pensions.

Taxing pensions was one of the cornerstones of Gov. Rick Snyder's overhaul of the state tax system that was approved amid partisan rancor earlier this year.

Friday's decision means that pension payments to many Michigan retirees will be subject to withholding beginning Jan. 1.

The main component of the personal income tax changes -- ending the blanket exemption for all public pension and most private pension income above certain thresholds -- survived.

The court did, however, unanimously strike down provisions in the new tax law that would have phased out for wealthier taxpayers the use of personal tax exemptions. That provision, effectively raising taxes on higher income earners, is barred by the state constitutional ban on a graduated income tax, the court found.