Michigan Sales and Use Tax
What is the Michigan sales tax?
Taxes in Michigan are destination-based, meaning the Michigan sales tax rate is based, or determined from, the destination location an item is shipped to. This complicates business for retailers who need to have the exact and up-to-date sales tax rate for every shipment they make.
To see a full breakout of Michigan sales tax rates by state, county, city and special district, use our easy Michigan sales tax calculator. After putting in any ZIP code, you can enter a retail price to calculate Michigan sales tax totals.
What is the Michigan use tax?
The Michigan state use tax rate is the same as the state rate, but there is no use tax collected for county, city or special districts.
If you reside in MI, use tax is due to the state on any and all transactions where sales tax has not been paid, even out-of-state internet sales.
Who has to pay Michigan sales tax or use tax?
In general, a business must collect and remit all applicable Michigan sales taxes if that business has nexus, a physical presence such as a brick-and-mortar location, within a given state. The presence of an employee or salesperson, delivery by the seller's vehicle, and storage of materials usually establishes nexus as well.
Michigan says that an out-of-state seller is required to collect tax if they can be defined as "sellers that engage in specific activities". Michigan does not currently have additional laws establishing nexus for other reasons such as out-of-state businesses using in-state affiliates, advertisers or vendors, or businesses that make internet sales or mail catalogs.
If you are not sure if you have established nexus in Michigan, you can usually get free help by contacting the Michigan Department of Treasury. Click here for an updated listing of direct phone numbers. You could also contact a qualified certified public accountant or lawyer who specializes in tax law in Michigan. Click here for listing of recommended resources.
Special rules applying to Michigan sales tax and use taxes?
- Shipping is taxable.
- Finance charges are exempt from sales tax, when stated separately.
- Clothing is taxed at the same rate as the general sales tax.
- Michigan Sales tax holidays have been held in the past, but have not been authorized yet this year.
Since Michigan legislators can vote to change the Michigan sales tax and use tax rates at any time, it is very difficult for individuals to keep track of the changes. The population of MI state is also rapidly changing, which can cause frequent updates to the ZIP codes and local municipality names and complicates the job of keeping track of Michigan sales tax jurisdictions.