Moving from Quebec to Michigan: Taxes, the TP-1, and the Auto Corridor

Q: What other taxes does Michigan have?

Sales tax. Michigan's 6% flat sales tax applies statewide with no local add-ons. That's a real drop from Quebec's combined QST (9.975%) plus GST (5%), close to 15% combined. Estate and inheritance tax. Michigan has no state estate tax and no inheritance tax. Only the federal estate tax can apply, at the federal exemption level. Quebec has no separate estate tax either, but the deemed-disposition rule at death (and at departure) taxes accrued gains that a straightforward estate tax wouldn't reach the same way.

By Yarik Yarosh, CPA ·August 31, 2026 ·9 min read

Written by Yarik Yarosh, CPA (US & Canada) August 31, 2026 · FL CPA license AC61704 · CPA Ontario

Quebec runs the only Canadian departure that closes through three separate tax authorities instead of two, and Michigan runs one of the few US states where the number of taxing bodies also goes up rather than down, because of its city income taxes. That combination makes this corridor busier on paperwork than most, even though the underlying industries, aerospace, AI, gaming, finance, feed a genuinely large flow of Montreal talent into the Detroit auto and mobility cluster. Quebec’s combined top rate runs near 53.31%. Michigan’s flat 4.25% looks like an obvious win until the TP-1, the QHSF, and Detroit’s own tax show up on the same file.

✓Key takeaway

Quebec’s combined federal-plus-provincial top rate sits near 53.31%. Michigan charges a flat 4.25% on all taxable income, with no brackets. A Quebec departure closes through three authorities: the CRA (final T1), Revenu Québec (final TP-1 and Relevé slips), and, for anyone billing through a Quebec corporation, the Health Services Fund (QHSF). Michigan layers on its own wrinkle, about 24 cities charge a local income tax, Detroit’s is the biggest at 2.4% resident / 1.2% non-resident. The RRSP keeps its treaty deferral because Michigan starts from federal AGI. RAMQ coverage runs out at the end of the third month after departure, and QST plus GST (about 15% combined) drops to Michigan’s flat 6%.

How does Michigan’s tax compare to Quebec?

The gap is large on paper and gets absorbed fast by everything that isn’t the state rate.

Jurisdiction	Top rate	Combined with other levels
Quebec	25.75% top provincial bracket	About 53.31% combined with federal
Michigan	4.25% flat	Same 4.25%, no state brackets
Detroit city tax (resident)	2.4%	Added on top of the 4.25% state rate
Detroit city tax (non-resident)	1.2%	Applies to Detroit-source income only

On $150,000 USD of salary, Michigan’s state tax runs about $6,375, versus a Quebec provincial bite that would run several times that at the top bracket once combined with federal tax. The rate drop is real. It just isn’t the whole story once the departure-year filings and the city tax question get added in.

Does Michigan have a city income tax?

Yes, and this is the Michigan-specific wrinkle that a flat-tax state doesn’t usually carry. About 24 Michigan cities impose their own income tax on top of the state’s 4.25%, and Detroit is the one that actually matters for most movers: 2.4% for residents, 1.2% for non-residents working in the city but living outside it.

If you live in Detroit, the combined state-plus-city rate is 6.65%. If you live in a suburb like Troy, Ann Arbor, Dearborn, or Royal Oak, none of which levy a city income tax, you pay only the 4.25% state rate on the same paycheck. If you live outside the city and work inside it, the 1.2% non-resident rate applies just to the Detroit-source wages. The practical result: for a Quebec mover choosing where to live near a Detroit-area employer, the address matters as much as the offer.

What happens on the Quebec side when I leave?

Quebec is the one province that runs its own separate income tax system, and that means the departure year closes through three authorities instead of the usual two.

The CRA takes the final federal T1, the same as any other province. Revenu Québec takes a separate final TP-1, covering worldwide income to the departure date and Quebec-source income for the rest of the year, and issues Relevé slips (Relevé 1 for employment, Relevé 3 for investment income) instead of the T4 and T5 every other province uses. Anyone billing consulting income or drawing salary through a Quebec-incorporated company also carries a Health Services Fund (QHSF) account, the employer-side payroll contribution running roughly 1.25% to 4.26% of payroll, that needs its own separate wind-down.

The federal mechanics, including Form T1161 and T1243, apply regardless of destination, and the full sequence sits in the leaving-Canada checklist.
Quebec Pension Plan (QPP) contributions, not CPP, apply to departure-year employment income, and QPP keeps paying on the same schedule after the move, taxed under the treaty once you’re a US resident.
RAMQ coverage runs out on the last day of the third month after you leave. Notify RAMQ directly; the lapse is not automatic. See the provincial health insurance wind-down guide.

How does Michigan treat the RRSP?

Michigan starts from federal adjusted gross income, and the treaty deferral under Article XVIII keeps RRSP growth out of federal AGI, so it stays out of Michigan’s tax base during the deferral period too. No separate state-level addback, unlike a New York or California file.

When a withdrawal happens, the distribution enters federal AGI and flows through to Michigan taxable income. Michigan’s pension and retirement income exemption can then reduce or eliminate the state-level tax on that withdrawal, depending on birth year, which is the next question.

Does Michigan tax pensions and retirement income?

It depends entirely on the year you were born, and the exemption is generous at the older end and thin at the younger end.

Born before 1946: pension and retirement income, including RRSP/RRIF distributions reported as pension income, is exempt up to $61,518 (single) / $123,036 (joint) for 2025.
Born 1946-1952: smaller exemptions apply, phased in over time, with lower dollar caps and fewer qualifying income types than the pre-1946 group.
Born 1953 or later: a flat $20,000 (single) / $40,000 (joint) exemption applies against all income, not just retirement income, and only phases in at age 67.

For a Quebec retiree drawing RRSP or RRIF income in Michigan, this is the difference between the exemption covering most of the withdrawal and the full 4.25% applying to nearly all of it.

What about Quebec professionals moving to Michigan?

The corridor runs on a specific set of industry pairings, and they’re a closer professional fit than the rate math alone suggests.

Bombardier, CAE, and Pratt & Whitney aerospace engineers move into GM, Ford, and Stellantis auto manufacturing and EV retooling work, where the systems-engineering skill set transfers directly.
Montreal’s AI cluster (Mila, the Element AI lineage, and the university research pipeline) feeds Cruise, Waymo, and May Mobility autonomous-vehicle R&D, much of which now runs out of the Detroit area.
Ubisoft Montreal game developers move into automotive simulation and digital-twin work, a niche that barely existed a decade ago and now draws directly on gaming-engine experience.
Desjardins and National Bank finance staff move into Ally Financial, GM Financial, and Rocket Mortgage, all headquartered or heavily staffed in metro Detroit.
Quebec logistics and supply-chain specialists move into automotive Tier 1 supplier operations.
Montreal pharma talent moves into the health-tech and biotech corridor building out around Ann Arbor.

How does Michigan property tax compare to Quebec?

Higher, and there’s a reset trap on top of the rate gap. Most Quebec municipalities run effective property tax rates below 1% of assessed value. Michigan runs meaningfully higher: Wayne County (the Detroit suburbs) at about 2.5% to 3.5%, Oakland County (Troy, Birmingham) at about 1.5% to 2.0%, and Washtenaw County (Ann Arbor) at about 1.8% to 2.2%.

Michigan’s Proposal A caps a property’s taxable value at inflation adjustments while it’s owned, but the cap resets on sale: the taxable value uncaps to 50% of the new sale price. A Quebec buyer purchasing into a rising Michigan market can end up with a first-year tax bill noticeably higher than the prior owner’s, purely because ownership changed hands.

Hypothetical example

Invented numbers. A Mila-trained AI researcher takes a senior role on an autonomous-vehicle team at a Detroit-area OEM, moving mid-year with $175,000 USD in first-year compensation. She leaves a $110,000 RRSP untouched and a non-registered account carrying $35,000 of unrealized gains, plus a small consulting sideline billed through a Quebec corporation with its own QHSF account. Deemed disposition on departure makes half the non-registered gain, $17,500, a taxable capital gain on both her final T1 and TP-1, taxed near Quebec’s combined top rate of 53.31%, for roughly $9,300 in combined federal and Quebec tax on that gain alone. Closing the file means three separate wind-downs: the CRA and Revenu Québec on the personal side, and the QHSF account tied to her consulting corporation, deregistered on its own schedule. She settles in Ann Arbor, outside any city income tax, so her Michigan paycheck carries only the flat 4.25%, about $4,800 on roughly $113,000 USD earned after the move. Had she settled in Detroit proper instead, the 2.4% resident city tax would add close to $2,700 to that same period. Her RRSP keeps its treaty deferral, RAMQ lapses three months after she files the departure notice, and QPP keeps paying on schedule, taxed under the treaty once she’s a US resident.

Illustrative numbers only, not a real client and not advice for your facts.

What other taxes does Michigan have?

Sales tax. Michigan’s 6% flat sales tax applies statewide with no local add-ons. That’s a real drop from Quebec’s combined QST (9.975%) plus GST (5%), close to 15% combined.

Estate and inheritance tax. Michigan has no state estate tax and no inheritance tax. Only the federal estate tax can apply, at the federal exemption level. Quebec has no separate estate tax either, but the deemed-disposition rule at death (and at departure) taxes accrued gains that a straightforward estate tax wouldn’t reach the same way.

What should I do next?

Pin the departure date first. It fixes the TP-1, the T1, the deemed disposition, and both the RAMQ and QHSF clocks to the same day. Confirm whether any income runs through a Quebec corporation, since that account needs its own wind-down separate from the personal filings. Then confirm the exact Michigan address, city limits or suburb, before treating any tax estimate as final, and check the property tax reset math before closing on a home.

Departure tax checklist
Canada departure tax: T1161 and T1243
US-Canada tax treaty explained
RRSP and TFSA on a US move
First US tax return after moving from Canada
State income tax for cross-border filers
Moving from Ontario to Michigan, the sibling province corridor
Windsor-Detroit commuter tax residency
Montreal to Detroit, the city-level corridor
Toronto to Detroit, the city-level corridor from Ontario
Moving from Canada to Michigan, the country-level parent guide
Quebec to Texas, the biggest rate drop corridor
Provincial health insurance when leaving Canada

Planning a move from Quebec to Michigan?

The Cross-Border Assessment is a fixed $250. You get a written, CPA-reviewed plan covering your TP-1 and T1, the QHSF wind-down if you bill through a Quebec corporation, and the Michigan and city tax filings on the other side.

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Cite this page

Yarik Yarosh, CPA. "Moving from Quebec to Michigan: Taxes, the TP-1, and the Auto Corridor." Blue Cloud CPA, August 31, 2026. https://bluecloudcpa.com/guides/moving-from-quebec-to-michigan-taxes

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.