2024 Guide to State Sales Tax in Michigan

What is sales tax in Michigan?

Michigan imposes a state sales tax and does not allow cities or localities to impose local sales taxes so there are no local sales tax rates in MI. The MI sales tax rate is 6%.

However, there are some notable exceptions to the typical sales tax rate for Michigan.

For example, the sale of home heating fuels, electricity, and natural or artificial gas for residential use is only taxed at a 4% rate. There are also other exemptions and special rates for sales and use taxes in Michigan.

Learn more about MI sales tax rates from the Michigan Department of Treasury’s website.

What is the Michigan food tax?

Technically, there is no Michigan food tax because the sales of food – and anything else purchased for human consumption – is exempt from sales tax. Michigan’s sales tax exemption on food includes:

• Food and food ingredients whether in liquid, concentrated, solid, frozen, dried, or dehydrated form.

However, there are types of food that aren’t included in this sales tax exemption:

• Prepared food
• Alcoholic beverages
• Tobacco

Learn more about the Michigan tax on food, including what qualifies as prepared food and what doesn’t.

What is the restaurant tax in Michigan?

Michigan’s restaurant tax has some complicated rules. Sometimes restaurants need to charge sales tax for restaurant food and sometimes the food sale can qualify for Michigan’s food tax exemption. With the Michigan sales tax on restaurant food, it depends if the food in question meets the criteria of a ‘prepared food.’

Michigan’s definition of ‘prepared foods:’

• Food sold in a heated state or that is heated by the seller
• Two or more food ingredients mixed or combined by the seller for sale as a single item or:
• Food sold with eating utensils provided by the seller (including utensils, glasses, napkins, straws, and plates) but not a container or packaging to transport the food.

Prepared food does not include:

• Food that’s only cut, repackaged, or pasteurized by the seller
• Raw eggs, meat, poultry, fish, and other items that require cooking by the buyer
• Food sold in an unheated state by weight or volume without eating utensils
• Bakery items sold without eating utensils

Food where the customer collects the eating utensils themselves or where the eating utensils are put into a bag or container for transport are also exempt from taxes.

For example, if an employee hands you a plate for a salad bar then that meal is taxable. If you pick up the plate yourself from a stack, then the meal isn’t taxable.

Learn more about Michigan restaurant tax rules.

What is Michigan’s sales tax on clothing?

Michigan charges the same 6% sales tax on clothing as other items. However, there is a sales tax exemption for resellers of all kinds. If you’re purchasing clothing to resell then you’re exempt from paying taxes on that purchase.

What counts as taxable items in Michigan?

Michigan has a broad definition of items that are subject to sales tax with only a limited number of sales tax exempt items. All other items must be charged at the normal MI sales tax rate.

Here are a few examples of taxable items in Michigan:

• Tangible personal property, unless an exemption applies
• Food, unless not exempted
• Certain services
• Digital goods, unless exempted

Learn more about taxable items in Michigan.

Selling online in Michigan?

Think Michigan sales tax rules are hard to remember? Can’t remember the amount of sales tax to charge? Don’t know where you are towards achieving Michigan sales tax nexus? Or maybe you need more clarity on the Michigan Delivery and Installation Rule.

TaxCloud has Michigan sales tax software that can answer all your questions from state rates on food sales to details about Michigan sales tax collection. We can keep track of all your Michigan sales tax information – like whether you’ve achieved Michigan sales tax nexus this year and more. We can then make sure the correct Michigan tax rates are charged on all your products and help you with your Michigan sales tax registration and return.

Contact us to get started.

What are non-taxable items or sales tax exemptions in Michigan?

Michigan has a limited number of sales tax exemptions. Here’s a list of some of the exemptions on Michigan state sales tax:

• Software as a Service (SaaS)
• Prescription drugs
• Food for human consumption, unless not exempted
• Feminine hygiene products
• Data center equipment
• Sales or rentals of medical equipment
• Sales or rentals of mobility or prosthetic devices
• Some services

Learn more about Michigan sales tax exemptions.

When do I need to collect sales tax in MI?

Ecommerce sellers are required to collect and remit sales tax in Michigan only after their business achieves Michigan sales tax nexus.

There are two ways to reach Michigan nexus:

Michigan physical nexus

Physical MI nexus is achieved when your business has a type of physical presence in the State of Michigan. See below for details on how Michigan determines physical nexus.

Michigan economic nexus

Michigan economic nexus is achieved when a business makes $100,000 in eligible sales or processes 200 transactions in a calendar year in the state.

What is Michigan’s physical nexus threshold?

Physical MI nexus is generated if you engage in specific business activities that create physical nexus in Michigan. Businesses who have physical MI nexus must collect and remit sales tax on all taxable goods that are sold to Michigan customers.

Examples of business activities that can create physical MI sales tax nexus include:

• Using employees, agents, representatives, or independent contractors in Michigan to promote or facilitate sales by the seller to purchasers in Michigan.
• Maintaining, occupying, or using an office, distribution facility, warehouse, storage place, or similar place of business in Michigan to facilitate the delivery or sale of tangible personal property sold by the seller to the seller’s purchasers in Michigan.
• Using, with the seller’s consent or knowledge, trademarks, service marks, or trade names in Michigan that are the same or substantially similar to those used by the seller.
• Delivers, installs, assembles, or performs maintenance or repair services for the seller’s purchasers in Michigan.Learn more about physical nexus in MI.

What is the Michigan economic nexus threshold?

Out-of-state merchants that make $100,000 in total retail sales or processed 200 orders in the state during the previous calendar year must collect, file and remit Michigan state sales tax.

To calculate the $100,000 sales threshold, count the following:

• Remote sellers count transactions made through a marketplace facilitator in determining if they have economic nexus.
• Marketplace facilitators must include both transactions made on its own behalf and transactions facilitated for sellers in determining if it has economic nexus in Michigan.
• Retail sales include taxable and nontaxable sales made directly by the seller.

When you meet the Michigan economic nexus threshold, you must register and begin collecting sales taxes.

Learn more about Michigan economic nexus.

How does Michigan nexus work with marketplaces?

Marketplace facilitators must pay close attention to the rules around calculating Michigan sales tax nexus for marketplaces. The same thresholds of $100,000 or 200 transactions apply to marketplaces, however:

• A marketplace facilitator must count sales it makes directly and those it facilitates towards its Michigan nexus status.
• Marketplace sellers do not need a Michigan sales tax license for facilitated sales if the facilitator is collecting taxes on their behalf. However, they have to count transactions facilitated by a marketplace towards their sales tax threshold for Michigan.

Learn more about the Michigan nexus rules around marketplace facilitators and sellers on the Michigan Department of Treasury website.

Are there sales tax holidays in Michigan?

There are no Michigan sales tax holidays in 2024.

Is Michigan a member of the SST (Streamlined Sales Tax)?

Currently, Michigan is a full member of the Streamlined Sales Tax Governing Board (SSTGB). That means sellers can choose to register and pay for Michigan sales tax directly with the state of Michigan or via the Streamlined Sales Tax site.

How do I register for a sales tax permit in Michigan?

When you meet the economic or physical nexus requirements in Michigan, you’ll have to register for a Michigan sales tax permit via the Michigan Department of the Treasury. Michigan sales tax registration is simple.

It’s free to register and you have two options for doing so:

• Michigan Department of Treasury Online New Business Registration. You can complete your Michigan sales tax registration directly on the state’s website. It’s convenient and quick to fill out. Applicants will receive their new Michigan sales tax permit in as little as 7 business days.
• Streamlined Sales Tax Registration System (SSTRS). Because Michigan is an SST state, you also can choose to register via the SSTRS site. This is a streamlined way to register for a Michigan sales tax permit and allows you to register for more than one state at a time.

Learn more about Michigan sales tax registration.