Combined rate and how to defer it in Michigan.
Michigan's flat 4.25% income tax applies to capital gains, putting the combined rate for investment property at 28.1% (20% federal + 3.8% NIIT + 4.25% state).
Michigan taxes capital gains as ordinary income at a flat 4.25% state rate, on top of federal. Estimate the full bill including depreciation recapture with the capital gains tax calculator.
A 1031 like-kind exchange can defer the 28.1% combined rate when all sale proceeds are reinvested into a replacement property. Model the exchange in the 1031 exchange calculator and track your deadlines with the timeline calculator.