Alberta to Michigan: Energy to Auto, a Flat 4.25%, and Detroit's City Tax

Alberta's energy sector produces the same engineers Michigan's auto industry needs: project managers, controls and systems engineers, and manufacturing specialists. The EV and battery transition has pulled Calgary and Edmonton talent into the Detroit suburbs, Ann Arbor, and the west side of the state. The tax picture is a moderate cut: Alberta's combined top rate of about 48% becomes about 41.25% in most of Michigan, or 43.65% inside Detroit.

Key takeaways

• Alberta's roughly 48% top rate sets the departure tax. On a $300,000 unrealized gain, about $72,000.
• Michigan's flat 4.25% plus Detroit's 2.4% resident city tax; most suburbs have no city tax.
• Michigan follows the treaty's RRSP deferral because its taxable income starts from federal AGI.
• Alberta's 5% GST becomes a flat 6% sales tax.
• Property tax is far higher than Alberta's; file the Principal Residence Exemption affidavit at closing.

The Alberta departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. Alberta real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. A Calgary professional corporation is deemed sold, loses CCPC status, and becomes a US controlled foreign corporation with Form 5471 filings; wind it up before departure. AHCIP ends on permanent departure.

Michigan's side

Flat 4.25% state income tax on federal AGI with Michigan adjustments; city income tax of 2.4% in Detroit, 1.5% in Grand Rapids, 1% in most other taxing cities, and none in Ann Arbor, Troy, Novi, or most of Oakland County; 6% sales tax with no local additions; high property tax softened by the Principal Residence Exemption and a taxable-value growth cap; no estate tax.

The RRSP in Michigan

Federally deferred under Article XVIII of the treaty and, because Michigan starts from federal AGI, deferred for Michigan too. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Michigan's 4.25% with no credit for the Canadian withholding.

Who makes this move

Calgary and Edmonton engineers into the Detroit automakers and their suppliers, EV and battery plant staff into the new facilities across the state, and Alberta project managers into the auto supply chain.

Worked example

A Calgary controls engineer moves to Novi on August 31 with $180,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, and a Calgary home sold in the departure year.

• Departure tax. $180,000 gain, $90,000 taxable, at about 48%: roughly $43,000.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. No tax on departure; federal and Michigan deferral.
• Michigan. Salary taxed at 4.25% state; Novi has no city tax. Combined top rate about 41.25%. GST 5% becomes sales tax 6%.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

Michigan's individual income tax rate and the list of cities that impose a city income tax are published by the Michigan Department of Treasury. — Michigan Department of Treasury, City Income Tax, https://www.michigan.gov/taxes/citytax

Alberta's top personal income tax bracket: "15%" on "$362,961.01 and up" (2025). — Government of Alberta, Personal income tax, https://www.alberta.ca/personal-income-tax

Practitioner note

The Alberta-to-Michigan decision that moves the most money is the address. Detroit's 2.4% city tax on a $200,000 salary is $4,800 a year that Troy or Novi does not charge, and property tax varies by district on top. We run both by address before the client commits.

See also: Weighing Florida instead? See the Canada-to-Florida guide.

Next step

Fairlight prepares the Alberta departure return, the corporate wind-up, and the first-year federal, Michigan, and city returns. See cross-border pricing or book a call.