Michigan sales tax is a flat 6% charged on retail purchases of most physical goods, applied uniformly across the state with no city or county add-ons. The seller is legally responsible for the tax, but it’s collected from the buyer at the register. Groceries, prescription drugs, and a handful of other categories are fully exempt, and the same 6% rate reappears as a use tax on items you buy out of state when no Michigan tax was charged.
What the 6% Rate Covers
Michigan’s General Sales Tax Act imposes the 6% on the gross proceeds of every retail sale where ownership of tangible personal property changes hands for payment.1Michigan Legislature. Michigan Compiled Laws 205.52 – Sales tax; rate; additional applicability Because the state does not authorize local governments to layer on their own sales taxes, the rate you pay in Detroit matches what you pay in Traverse City or Marquette. That uniformity is unusual among states and makes compliance simpler for both shoppers and sellers.
What’s Exempt
Several everyday categories carry no sales tax at all.
- Unprepared groceries and food ingredients are exempt. Prepared meals, heated food, and food sold for immediate consumption are taxed, and alcohol and tobacco never qualify for the food exemption.2Michigan Legislature. Michigan Compiled Laws 205.54g – Sales exempt from tax; food or drink from vending machine
- Prescription drugs are exempt, along with over-the-counter medications dispensed by prescription.2Michigan Legislature. Michigan Compiled Laws 205.54g – Sales exempt from tax; food or drink from vending machine
- Industrial processing equipment — machinery, tools, dies, and similar items used directly in manufacturing — can be purchased by qualifying manufacturers without tax.3Michigan Legislature. Michigan Compiled Laws 205.54t – Exemptions; industrial processing; definitions
- Government agencies, educational institutions, and qualifying nonprofits can claim exemption on their purchases.
Services
Michigan’s sales tax primarily targets physical goods, so most professional services — legal advice, accounting, consulting — are not taxed. A few categories are: telecommunications, short-term accommodations like hotel rooms, and some installation or repair work tied to tangible property. If a service transaction includes transferring ownership of a physical item, the goods portion is taxable even when the service itself is not.
Digital Products and Software
The lines here are specific. Prewritten software delivered electronically is treated the same as physical software and is taxable at 6%, including downloadable games and related content. Purely intangible digital goods like e-books, streamed movies, and streamed music are not taxed. Software-as-a-service accessed entirely through a web browser with no local download is generally not taxed, but if the SaaS product requires installing a desktop application or any local component, it can be reclassified as prewritten software and taxed. Custom software built exclusively for a single client is exempt, provided any modifications are itemized separately on the invoice.
Vehicles, Boats, and RVs
Titled purchases follow their own rules. When you buy a car, boat, or recreational vehicle from a licensed dealer, the dealer collects the 6% as part of the transaction. The trade-in credit is the useful piece: the agreed value of your old vehicle or watercraft is subtracted from the purchase price before tax is calculated, so you only pay 6% on the difference.4Michigan Legislature. Michigan Compiled Laws 205.51 – Definitions The trade-in value must be separately listed on the invoice for the credit to apply.
Private-party sales work differently. The buyer pays the 6% directly at the Secretary of State office when transferring the title. Michigan calculates tax on the full purchase price or the vehicle’s fair market value, whichever is higher, so writing a low number on the bill of sale won’t reduce your bill. A $15 title transfer fee applies, and waiting more than 15 days after the sale adds another $15 late fee.5Michigan Secretary of State. Buying, Selling, or Leasing
Use Tax on Out-of-State and Online Purchases
Michigan’s use tax catches purchases where no Michigan sales tax was collected. It applies at the same 6% rate and covers items bought online, from out-of-state retailers, or through catalogs when the seller didn’t charge Michigan tax. Any tangible personal property brought into Michigan within 90 days of purchase is presumed to be for use in the state and is subject to the tax.6Michigan Legislature. Michigan Compiled Laws 205.93 – Use Tax
To avoid double taxation, Michigan allows a credit for sales or use tax you already legally paid to another state on the same item. If you bought furniture in Ohio and paid Ohio’s sales tax, you won’t owe the full 6% again here. You’d owe only the difference if the other state’s rate was lower. Individual consumers report use tax on their Michigan income tax return; businesses report it through their regular sales and use tax filings.
When Out-of-State Sellers Must Collect
Remote businesses selling into Michigan must register and collect once they cross either of two thresholds in the previous calendar year: $100,000 in gross sales (including taxable, nontaxable, and exempt transactions) or 200 or more separate sales transactions with Michigan buyers.7Michigan Department of Treasury. Revenue Administrative Bulletin 2021-21 Both are measured January 1 through December 31. Crossing either threshold in one year triggers the obligation to collect starting the following year. Gross sales include all transaction types regardless of whether the specific product would be taxable, so a seller moving $100,000 of exempt food into Michigan still hits the threshold.
If you sell through a platform like Amazon, Etsy, or eBay, the marketplace facilitator is responsible for collecting and remitting Michigan tax on your behalf. Michigan law treats those sales as if they were the platform’s own, even when the underlying seller has no connection to the state.8Michigan Legislature. Michigan Compiled Laws 205.52d – Marketplace facilitator; tax remittance The facilitator’s obligation starts at the same $100,000 or 200-transaction threshold. If you also sell directly to Michigan customers outside the marketplace, those direct sales still count toward your own nexus and may require separate registration.
Getting a Michigan Sales Tax License
Any business making retail sales of taxable goods in Michigan needs a sales tax license before its first sale. There is no fee to register.9Michigan Department of Treasury. Sales Tax License FAQ You file Form 518 (Registration for Michigan Taxes) through the Michigan Treasury Online portal or by mail, providing your Federal Employer Identification Number (or Social Security Number for sole proprietors), the legal business name, physical address, and the date you plan to start making taxable sales.10Michigan Unemployment Insurance Agency. UIA Schedule A – Liability Questionnaire
Resale and Exemption Certificates
When you buy inventory for resale, you avoid tax on the purchase by giving the seller a completed Form 3372, Michigan’s Sales and Use Tax Certificate of Exemption.11Michigan Department of Treasury. Michigan Sales and Use Tax Certificate of Exemption The form requires your sales tax license number for resale-at-retail claims, and all four sections must be completed or the certificate is invalid. For ongoing business relationships, a blanket certificate covers all future transactions and stays valid as long as no more than 12 months pass between purchases, up to a maximum of four years. Electronic copies don’t require a signature; paper forms need the buyer’s signature and title. Sellers must keep these certificates on file, and if you can’t produce one during an audit, expect to owe tax on those transactions.
One quirk worth noting: Michigan does not issue “tax exempt numbers.” Buyers claiming an exemption provide the completed certificate itself, not a number.
Filing Frequency and Deadlines
Michigan assigns a filing frequency based on your estimated or historical tax liability. Returns and payments go through the Michigan Treasury Online portal.12Michigan Treasury Online. Welcome to Michigan Treasury Online
- Monthly filers: return and payment due by the 20th of the following month.
- Quarterly filers: due by the 20th of the month after the quarter ends (April 20, July 20, October 20, and January 20).
- Annual filers: due by February 28 of the following year.
- Accelerated filers (larger businesses) may be required to make a prepayment by the 20th of the current month, followed by a reconciliation payment by the 20th of the next month.
The portal generates a confirmation number when you submit; keep it. If the Treasury ever claims you missed a filing, that number is the fastest path to resolution.13Michigan Department of Treasury. Sales and Use Taxes
Early-Payment Discount
Michigan rewards sellers who remit early with a small collection discount, applied to two-thirds of the 6% collected. Pay by the 12th of the month and you keep 0.75% of the eligible amount, up to $20,000 per period. Pay between the 13th and the 20th and the rate drops to 0.5%, with a $15,000 cap.14Michigan Department of Treasury. Form 5096 Instructions – Sales, Use and Withholding Taxes For a high-volume retailer, that adds up over a year. Accelerated filers qualify for the 0.5% discount if they pay by the 20th.
Penalties for Late Filing or Payment
Missing a filing deadline triggers an automatic penalty of 5% of the tax owed for the first two months, with an additional 5% added for each month or partial month the return stays unfiled, capped at 25% of the tax due.15Michigan Legislature. Michigan Compiled Laws 205.24 – Revenue Division of Department of Treasury Interest accrues on top of the penalty from the original due date until payment is made.
Businesses that collect tax but fail to remit it on time face a steeper daily penalty of about 0.167% per day until paid, also capped at 25%.15Michigan Legislature. Michigan Compiled Laws 205.24 – Revenue Division of Department of Treasury The distinction is deliberate: holding tax you’ve already collected from customers and not remitting it is treated more aggressively than simply being late on a return. If the failure was genuinely beyond your control and not willful neglect, the state treasurer has authority to waive the penalty entirely, though the interest remains.