Does Michigan Have a State Inheritance Tax?

Yes, the Inheritance Tax is still in effect, but only for those individuals who inherited from a person who died on or before September 30, 1993.

For heirs of individuals who passed after 1993, inheritances from a Michigan estate that includes only property located in Michigan will not be subject to inheritance tax. But, if the estate includes property located in other states, a beneficiary who inherits the property may be subject to tax in that state.

Although there is technically no longer a Michigan Inheritance Tax, as of 2023 six states still have one: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. If you are the heir of a loved one who is a Michigan resident that passed away while owning property in one of these 6 states, you might still have to pay an inheritance tax on that property based on the state’s laws.

There are also certain situations with respect to “After Discovered Assets” where the Michigan Inheritance Tax may still be a problem. Continue reading to learn more…

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What Does The Michigan Inheritance Tax Consider As An “After Discovered Asset”?

The Michigan Inheritance Tax considers something as an “After Discovered Asset” when an estate has been closed, but a new asset has been found that was not included in the original estate. If this situation applies to you, the Michigan Department of Treasury has instructions on what you should do in this situation.

What Is The Difference Between The Michigan Inheritance Tax And The Estate Tax?

The major difference between the Michigan Inheritance Tax and the Estate Tax is that the Estate Tax is a tax imposed on the estate itself, whereas the Inheritance Tax is a tax on the actual heir of the property.

Does Michigan Have An Estate Tax?

There is no longer a Michigan Inheritance Tax. Additionally, the State of Michigan does not have an Estate Tax either. However, there is a Federal Estate Tax that your estate may be subject to.

What Is The Federal Estate Tax?

The Estate Tax, commonly referred to as the “Death Tax”, is a tax on your right to transfer property at your death. Proper Estate Planning done prior to death can help you reduce both Estate Taxes and Inheritance Taxes if you own property in a state that still has Inheritance Tax.

Does Michigan Have a State Inheritance Tax? – 2023