Does Michigan Have an Inheritance Tax? (2026)

Figures verified October 17, 2026 against Michigan Department of Treasury: Inheritance Tax Frequently Asked Questions · Update log

State estate tax: No
Inheritance tax: No
Federal: only above $15 million

Short answer

No. Michigan has no estate or inheritance tax. None applies to anyone who has died in the last three decades: Treasury says the old Michigan inheritance tax applies only to people who inherited from someone who died on or before September 30, 1993. The estate tax added that year was set equal to the federal credit for state death taxes, and Treasury now says it is not operative because of changes in federal law.

But two Michigan rules can cost an heir real money. A house that changes hands can have its taxable value uncapped, which can raise the property tax bill sharply unless it goes to a child, grandchild, parent or sibling and is not put to commercial use such as renting. And withdrawals from an inherited IRA are taxed at Michigan's 4.25% rate, since only a surviving spouse can use the pension subtraction on them.

What to do, and by when

No Michigan estate or inheritance tax return

Steps and returns for a Michigan estate, with deadlines
Who files	Which form	Deadline
Heirs collecting money or personal property, when there is no real estate	Affidavit of decedent's successor (SCAO form PC 598), if the estate is $53,000 or less for a 2026 death	No earlier than 28 days after the death
The heir or estate receiving the house	Notice of the transfer to the local assessor on the state tax commission's form	Within 45 days of the transfer
Creditors, after the estate publishes notice	Claim presented to the personal representative or the court	4 months after publication; 3 years after the death if no notice is published
The personal representative	Inventory sent to the heirs and beneficiaries	Within 91 days of appointment
The executor, only if the estate is over $15 million or to keep the unused exemption for a surviving spouse	Federal Form 706	9 months after the date of death (an automatic 6-month extension to file is available on Form 4768)
The executor	Final Form 1040 for the person who died	April 15 of the year after death

Worked example: who inherits decides the property tax

Your mother bought her Michigan house in 1995. It is now worth $320,000, so its state equalized value, half of market value, is $160,000. Because increases have been capped since she bought it, its taxable value is only $90,000. She dies in 2026 and leaves it to you.

No Michigan inheritance or estate tax: She died long after September 30, 1993, so there is no Michigan inheritance tax, and the estate is far below the federal exemption of $15 million for 2026.
You keep the cap if you use it as a home: A transfer of residential property to the owner's son or daughter is not treated as a change of ownership if it is not used for a commercial purpose afterward. The taxable value stays at $90,000 and can rise only by 5% or inflation, whichever is less.
If you rent it out, or she left it to a nephew: Renting it for 15 days or more in a year can count as a commercial purpose, and a nephew is not on the related-individual list. Either way the taxable value uncaps to the state equalized value the following year: from $90,000 to $160,000, so the bill is figured on about 78% more value.
Selling it: Your basis is the $320,000 market value at her death, so a sale near that price produces little or no capital gain.

The takeaway: In Michigan, decide what you will do with an inherited house before the next assessment. Tell the assessor about the transfer within 45 days, and keep proof of your relationship handy: the assessor or Treasury can ask for it, with 30 days to respond and a $200 fine for not answering.

Uncapping: property tax on an inherited Michigan home

Michigan caps how fast a property's taxable value can grow, then resets it to the state equalized value, half of market value, the year after ownership changes. For a house bought long ago, that reset can be the biggest cost of inheriting it.

The cap. Each year taxable value can grow by no more than 5% or the rate of inflation, whichever is lower, plus additions. After a transfer of ownership, taxable value for the next year equals the state equalized value, and the cap starts again from there. (source)
The family exception. Transferring residential property to the owner's or the owner's spouse's mother, father, brother, sister, son, daughter, adopted son or daughter, grandson or granddaughter is not a transfer of ownership, as long as the property is not used for any commercial purpose afterward. (source)
What counts as commercial. Commercial purpose means use in a business or other undertaking for profit. Renting the home for fewer than 15 days in a calendar year does not count. (source)
Tell the assessor in 45 days. The person receiving the property must notify the local assessing office within 45 days of the transfer, on the state tax commission's form. If the assessor or Treasury asks for proof that the family exception applies, you have 30 days to give it or face a $200 fine. (source)

Michigan's small estate limit for 2026

Michigan raised its small estate limit to $50,000 in February 2024 and indexes it every year. Funeral and burial costs come off first, and for deaths since January 1, 2024, a mortgage or other lien on real estate is subtracted from that property's value up to a capped amount.

$53,000 for deaths in 2026. Probate courts apply a $53,000 limit for deaths on or after January 1, 2026, $51,000 for 2025, and $50,000 for deaths from February 21 through December 31, 2024. The real estate lien deduction is capped at $264,000 for 2026 deaths. (source)
Assignment through the probate court. Under MCL 700.3982 the court can order the property turned over to the surviving spouse, or to the heirs if there is no spouse, once funeral and burial costs are paid. The heirs (other than a spouse entitled to allowances, or minor children) remain liable for the person's unpaid debts, up to what they received, for 63 days after the order. (source)
Affidavit, with no court filing. If there is no real estate in the estate and 28 days have passed, the successor can collect money owed to the person, tangible property and stocks by giving the holder a sworn affidavit and the death certificate. Nobody can have applied to be personal representative. (source)
Which one fits. Michigan Legal Help describes the affidavit as filed with no court, while the assignment needs a form filed with the probate court and a judge's signature. Use the court route when the estate includes real estate. (source)

Michigan probate deadlines and spouse allowances

Four months after notice, three years without it. Claims that arose before the death must be presented within four months after the notice to creditors is published. A creditor the personal representative knew about gets until one month after their own notice, if that is later. Without proper notice, the outer limit is three years after the death. (source)
Inventory in 91 days. The personal representative prepares an inventory within 91 days after appointment and sends it to everyone presumptively entitled to share in the estate. Filing it with the court is optional, but the court must get the figures it needs to compute the inventory fee. (source)
Homestead allowance. A surviving spouse, or the minor and dependent children if there is no spouse, receives a homestead allowance with a base of $15,000 in the statute, adjusted each year for inflation. It comes ahead of creditors other than administration costs and reasonable funeral and burial expenses. (source)

Michigan income tax on an inherited IRA

4.25% for 2026. Treasury has confirmed that the individual income tax rate for the 2026 tax year remains 4.25%. A taxable withdrawal from an inherited IRA or 401(k) is part of a Michigan resident's income at that rate. (source)
Only a spouse gets the pension subtraction. Treasury's rule for IRA and other individual plans is that distributions after the participant's death may only be subtracted by a surviving spouse, and only if they would have qualified for the participant. A child or other heir cannot use the retirement subtraction on inherited money. (source)

Capital gains on inherited Michigan property

Basis resets at death. The basis of anything you inherit is its fair market value on the date of death or the alternate valuation date. Keep a date-of-death appraisal of the house; it sets the figure you will compare against any sale price. (source)
Not a community property state. Michigan follows the common law system. For a home a married couple owned together, the surviving spouse gets a new basis only on the half that was included in the deceased spouse's estate. (source)

If the person who died lived in another state

Michigan's border states, Ohio, Indiana and Wisconsin, do not tax heirs either. The exposure usually comes from farther away: a parent who retired to another state, or who owned a lake house or rental in one of the five states with an inheritance tax, can leave property that state will tax.

What matters is where the person who died lived and where their real estate is, not where you live. Compare inheritance tax by state to see who pays and how much.

Federal estate tax

No Michigan return is needed. The executor's tax filings are federal: the final Form 1040 for the person who died, Form 1041 if the estate earns $600 or more of income while it is being settled, and Form 706 only for a large estate or to pass the unused exemption to a surviving spouse.

For deaths in 2026, the federal estate tax applies only to estates over $15,000,000 per person, at rates up to 40%. The exemption was set by the July 4, 2025 tax law (Public Law 119-21, often called the "One Big Beautiful Bill Act"; the IRS now calls it the Working Families Tax Cuts law), is permanent, and is indexed for inflation starting in 2027. A surviving spouse can add the unused exemption of the first spouse to die (portability) by filing Form 706. See the federal estate tax guide.

Frequently asked questions

Does Michigan have an inheritance tax?

Only for people who inherited from someone who died on or before September 30, 1993. For later deaths there is no Michigan inheritance tax, and Treasury says the Michigan estate tax is not operative because of changes in federal law.

Does Michigan require an inheritance tax waiver form?

No, not for any recent death. With no inheritance tax after September 1993 and no operative estate tax, there is nothing to clear with Treasury. Treasury's inheritance tax section deals only with old estates, such as assets discovered later from a pre-October 1993 death.

What is the Michigan estate tax exemption for 2026?

There is no Michigan estate tax in effect, so there is no state exemption. The federal estate tax applies only to estates over $15 million for deaths in 2026.

How much inheritance tax will I pay in Michigan?

Nothing to Michigan. The costs to plan for are property tax if the house's taxable value uncaps, and 4.25% Michigan income tax on inherited IRA withdrawals.

What is the small estate limit in Michigan for 2026?

$53,000 after funeral and burial costs, for deaths on or after January 1, 2026. Liens on real estate can be subtracted up to $264,000. With no real estate, heirs can use an affidavit after 28 days; otherwise they petition the probate court for an assignment.

Will the property taxes go up if I inherit my parent's house in Michigan?

Not if you are their child, grandchild, parent or sibling and the house is not used commercially, for example rented 15 days or more a year. Otherwise its taxable value uncaps to half its market value the following year.

Do I pay Michigan tax on an inherited IRA?

Yes, at 4.25% for 2026 if you live in Michigan. Only a surviving spouse may subtract distributions received after the account owner's death.

How long do creditors have to make a claim against an estate in Michigan?

Four months from publication of the notice to creditors, or one month after a known creditor is sent notice if later. If no notice is published, claims can be made for up to three years after the death.

Sources

This information is provided for educational purposes only and should not be considered legal or tax advice. Consult a qualified tax professional for guidance specific to your situation.

Related state pages

Mississippi

No state estate or inheritance tax

Missouri

No state estate or inheritance tax

Connecticut

Estate tax: $15,000,000 exemption

Federal Estate Tax →Estate Tax vs Inheritance Tax →Executor Checklist →Inheritance Tax by State →All States →