Standard rate
The standard sales tax rate in Michigan for 2024 is 6%.
Reduced rate
There is no reduced sales tax rate specified.
Sales of tax-free products and services
Some tax-free products and services in Michigan include:
- Groceries;
- Prescription Drugs;
- Machinery;
- Utilities & Fuel;
- Newspapers;
- and others.
Who is obliged to register sales tax in Michigan
You must register in Michigan and pay use tax on sales and rentals if you:
- Sell in Michigan, qualify as a dealer under the definition, and meet the threshold.
Threshold
Starting September 30, 2018, out-of-state dealers with sufficient physical or economic presence for establishing nexus in Michigan must register to collect sales tax. This includes online sellers or remote sellers that meet the $100,000 threshold – or more than 200 transactions in the state in the previous or current calendar year.
Digital services are not subject to sales tax. However, prewritten computer software is subject to sales tax and require sales tax registration if the threshold is met. Products that may appear to be “digital goods” but constitute “prewritten computer software” include applications and video games downloaded or otherwise installed onto electronic devices such as smartphones, tablets, and game consoles.
Marketplace thresholds by state
The special rules are applicable to the SAAS business.
Software as Service Tax Thresholds by state.
Online Marketplaces
If all of your sales in Michigan are through a marketplace platform, and you are not a marketplace facilitator, you can not register for paying Michigan sales tax. Your marketplace facilitator pays the sales tax itself.
If you are selling through your own marketplace, then you will need to register for paying sales tax if you meet the threshold.
Sales tax payment and filing date
Depending on your tax liability, determine your filing frequency – either annual, monthly, or quarterly:
- Annual – $0 to $62.50;
- Quarterly – $62.51 to $300.00;
- Monthly – $300.01 and up.
Returns are always due on the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Penalty and interest
Failure to file or pay – 5% of the total unpaid tax due for the first two months.
Further – 5% of the unpaid tax amount is assessed each month (maximum – 25%).
Discount
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Michigan Sales Tax Holiday
Michigan currently does not have any sales tax holidays.
Michigan Sales Tax Nexus
- Physical Nexus: Physical Nexus in Michigan is established if a business has a physical presence, such as an office, warehouse, or employees within the state.
- Economic Nexus: Michigan mandates that remote sellers collect and remit sales tax if they have $100,000 in gross sales or 200 or more separate transactions in the state annually. This applies to businesses without a physical presence but with significant economic activities.