Legislation would repeal Michigan's estate tax for good.
In the spirit of the upcoming Halloween holiday, NFIB is supporting legislation that would drive a final “stake in the heart” of our state’s “death tax,” or inheritance and estate tax that was created in 1899. Although it is ineffective, Michigan still has an inheritance tax and an estate tax in its statutes. In order to change that, House Bill 4922, sponsored by Steve Johnson (R-Kent County) would end Michigan’s estate tax for good by repealing the Public Act 188 of 1899.
While it is not in effect for all practical purposes, the inheritance tax in Michigan still exists. However, it does not apply to any recent estate. It only applies to people who received property from someone who passed away prior to or on September 30, 1993. Most estates from that period have been settled. However, with the statute still on the books, any legislature could amend it to bring it back to life. Eliminating it entirely would require a new act to be passed which would make such an attempt more difficult.
History of NFIB Efforts to Eliminate the Michigan Death Tax
In 2001, NFIB supported the federal Economic Growth and Tax Relief Reconciliation Act that phased out Michigan’s estate tax over four years, ending its ability to collect any tax in 2005. During the debate over the federal tax changes, some state lawmakers wanted to keep the state inheritance tax by amending the current act so that the federal phase-out changes would not apply and it would be separated from the federal tax code. NFIB was successful in pushing for the state to take no action and let the estate tax phase out.
Prior to the 2001 changes, NFIB supported the elimination of Michigan’s confiscatory and complicated stand-alone statue by supporting legislation signed on June 3, 1993 by then Governor John Engler that followed the federal estate tax law. With that change, Michigan fell into line with 28 other states that followed the federal exemption amount for the calculation of state inheritance taxes that exempted estates less than $600,000.
Finally, NFIB supported Tax Cuts and Jobs Act of 2017 that further reduced the number of estates that would be subject to the federal estate tax by doubling the basic exclusion amount of an estate’s gross value. NFIB will continue in its efforts to totally eliminate the death tax.
