What Is Michigan's Sales Tax?


Michigan requires retailers to charge a sales tax for non-exempt goods and services. By law, at least 73 percent of the revenue from sales tax must go to the support of K-12 education. There are certain items free of sales tax, and other items that have their own special rate. In addition, the state allows exemptions to certain organizations and businesses.

Uniform Sales Tax Rates

The Michigan sales tax is charged statewide at the uniform rate of 6 percent. Although many states allow "supplemental" sales taxes by city and county jurisdictions, that's not the case in Michigan. Only finished goods purchased by the final consumer are subject to the tax, meaning companies that sell goods wholesale are not required to pay or collect the tax.

Sales Tax Licenses

The state requires anyone selling goods to an end user to obtain a sales tax license. This could be a conventional retail store or a service business, such as a building contractor or a plumbing company, that sells finished fixtures and equipment to their customers. Any business required to collect sales tax must file a return and submit the collected taxes to the Michigan Department of Treasury.

Exempt Organizations

Michigan exempts non-profit organizations such as churches and tax-exempt charitable groups from paying sales taxes on goods used in their operations. Other exempt organizations include those engaged in agriculture, non-profit schools and hospitals, government agencies, and building contractors working on church sanctuaries, non-profit housing or hospitals, or pollution control facilities. In addition, buyers of rolling stock for interstate transportation are exempt. The state requires these buyers to present a certificate of exemption at the time of purchase.

Exempt Goods and Special Rates

Several items are exempt from sales tax, including prescription drugs and food not sold for immediate consumption on the seller's premises. Heating fuel has a lower sales tax rate of 4 percent. Goods purchased out of state, then brought into Michigan for use, may escape sales taxes but are then subject to a 6 percent use tax. Michigan also levies a special sales tax on tobacco products, amounting to $2 for a pack of cigarettes and 50 cents on a cigar selling for more than $1.56. Gasoline is subject to a 13.8 cents per-gallon tax, charged at the pump. The rate rises to 15.2 cents per gallon for diesel fuel.

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