Everything you need to know about collecting sales tax in Michigan
When do I need to collect sales tax in Michigan?
As an ecommerce seller, you will need to collect sales tax in Michigan if you have:
- Economic nexus with taxable and non-taxable sales exceeding $100,000 or 200 or more separate transactions in the previous calendar year OR
- Physical presence (nexus) in Michigan
Below, we will highlight some of the basic provisions of Michigan sales tax law.
What is the sales tax rate for Michigan?
Sales tax rates range from state to local level.
- State: Michigan’s general sales tax rate is 6%. Sales of electricity, natural or artificial gas, and home heating fuels for residential use are taxed at a 4% rate.
- Local: Michigan does not have local sales tax jurisdictions.
What is the physical nexus threshold in Michigan?
Certain business activities create physical nexus for retail merchants in Michigan. If you have physical nexus, you are required to collect and remit sales tax on all taxable sales that are shipped to Michigan. MCL 205.52b
Examples of business activities that can create physical nexus are:
- 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.
Economic nexus. Remote sellers and marketplace facilitators that have taxable and non-taxable sales exceeding $100,000 or 200 or more separate transactions in the previous calendar year are required to collect and remit Michigan sales or use tax. Additional information on economic nexus requirements:
- Remote sellers count transactions made through a marketplace facilitator in determining if it has 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
What are examples of sales of taxable items?
- Tangible personal property, unless specifically exempted
- Certain services
- Leased tangible personal property
What are examples of sales of nontaxable/exempt items?
- Food (except prepared food)
- Prescription drugs
- Certain agricultural items
- Software as a service (SaaS)
- Digital goods
Are there any sales tax holidays?
Currently, Michigan does not have any sales tax holidays.
Is Michigan a member of the SST (Streamlined Sales Tax)?
Currently, Michigan is a full member of the Streamlined Sales Tax Governing Board (SSTGB).
How to get a sales tax permit / links to register in this state?
You can register online at:
Michigan is a one-rate state, there are no local jurisdictions that impose a sales tax.