What Are Michigan Inheritance Tax Laws?

The state of Michigan levies no inheritance tax or estate tax as of 2015, reports the Michigan Department of Treasury. The only death tax for Michigan residents is the federal estate tax levied on estates worth more than $5.43 million, according to Nolo.

Before Jan. 1, 2005, Michigan collected an estate tax called a pick up tax based on the amount the IRS received through the federal estate tax, explains Julie Garber for About.com. The state tax did not increase the overall tax levied on an estate, but rather the federal government and the Michigan Department of Treasury each took a portion of the total federal estate tax due. The Michigan Department of Treasury collected its portion directly from taxpayers. The Economic Growth and Tax Relief Reconciliation Act phased out pick up taxes by separating state and federal estate tax laws, and Michigan was one of the states that did not choose to levy a separate state estate tax.

Inheritance taxes are based on the property someone receives from a decedent, while estate taxes are based on the overall value of the decedent’s estate, notes Garber. Few states levy inheritance or estate taxes. Per the American Taxpayer Relief Act of 2013, only the richest estates pay federal estate taxes, states Nolo. Set at $5 million in 2012, the federal estate tax exemption adjusts for inflation each year.