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Michigan Sales Tax Guide 2024: Compliance, Rates, and Regulations for Businesses

By 

Updated 

January 16, 2024

 Reviewed by 

The Michigan sales tax rate is 6% as of 2023, which comprises a base state tax rate of 6%. There are no local sales taxes in Michigan. All businesses with Michigan sales tax nexus need to comply with Michigan sales tax laws, file returns, and remit collected sales tax revenue to the Michigan Department of Treasury.

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Sales tax at a glance

State taxing authority Michigan Department of Treasury
Michigan base sales tax rate 6%
Local tax rates None
2023 Michigan sales tax rate 6%
Tax threshold $100,000 in annual Michigan sales
Website Michigan Department of Treasury
Tax Line 517-335-7508

Michigan sales tax rates & calculations in 2023

The Michigan sales tax rate in 2023 is 6%. This comprises a base rate of 6%, as Michigan has no local sales taxes. The total sales tax can be as high as 6% for taxable transactions depending on the type of product sold or service rendered.

Recent tax rate changes in Michigan

There have been no recent changes to the Michigan state sales tax rate, which has remained at 6% since 1994.

FAQs

How do you calculate Michigan sales tax?

To calculate Michigan sales tax, you multiply the 6% state tax rate by the amount of a taxable sale. For example, if a product sells for $100, the sales tax would be $100 x 0.06 = $6.

What are the penalties for not paying Michigan sales tax?

Penalties for failing to pay Michigan sales tax include:

  • 5% negligence penalty
  • 25% fraud penalty
  • 0.5% monthly interest compounded daily

What’s the difference between destination-based and origin-based sales tax states?

Destination-based sales tax states tax sales based on where the customer receives the product. Origin-based sales tax states tax sales based on where the seller is located.

Is the Michigan sales tax destination-based or origin-based?

Michigan is a destination-based sales tax state, meaning sales tax is charged based on where the product or service is delivered to the customer.

Is Michigan a streamlined sales tax state?

Yes, Michigan is a full member state of the Streamlined Sales and Use Tax Agreement (SSUTA).

Sales tax nexus table in Michigan

Type of nexus Threshold
Physical presence Any physical presence
Economic nexus $100,000 in sales or 200 transactions
Nexus with marketplaces None
Payroll or property $350,000 payroll or $50,000 property

FAQs

Do I need a Michigan seller's permit if I’m only a wholesaler?

No, you do not need a Michigan seller's permit if you only sell goods wholesale for resale and provide your buyers with a valid resale certificate. Wholesalers still need to keep documentation in case of audit.

Do I need a Michigan seller's permit if I only sell temporarily in the state?

Yes, even a single temporary sales trip into Michigan can reach sales tax nexus, requiring a seller's permit and tax collection. There is no small seller exception in Michigan sales tax laws.

What's exempt in Michigan

Major categories of products exempt from Michigan sales tax include:

  • Most grocery food for home consumption
  • Prescription and nonprescription medicines for humans
  • Agricultural equipment and products
  • Industrial processing equipment
  • Interstate motor carrier rolling stock

Full details available in the Michigan Sales and Use Tax Exemptions Guide.

FAQs on taxability

Are groceries taxable in Michigan?

No, most grocery food items for home consumption are exempt from Michigan sales tax under the food exemption. Some prepared food may be taxed. See full grocery guidelines.

Is clothing taxable in Michigan?

Yes, clothing and footwear are generally taxable in Michigan unless specifically exempted, such as certain work clothes.

Are digital products taxable in Michigan?

Digital products like music, movies, ebooks, and downloaded software are not subject to Michigan sales tax as tangible personal property.

Is software-as-a-service (SaaS) taxable in Michigan?

No, software-as-a-service (SaaS), cloud software, and hosted software are not taxable in Michigan as electronically delivered software or communication services.

Are services taxable in Michigan?

Most services are not taxable in Michigan. However, some taxable services include accommodation rentals, telecom services, and installation/repair services to the property. 

No General Food and Beverage Tax in Michigan

While food and beverages are broadly exempt from Michigan's 6% sales tax, the state does levy selective excise taxes on certain items like liquor, tobacco, marijuana products, and soda.

For example, Michigan has a $0.52 per gallon excise tax on soda syrups and soft drinks sold to retailers. There are also extensive "sin taxes" on alcoholic beverages and tobacco products. However, no broad-based tax applies to grocery food and non-alcoholic drink sales.

Taxability of Alcohol, Tobacco, and Marijuana

Michigan levies a 16% excise tax on retail cannabis sales instead of the general 6% sales tax. Over 43% of the pretax purchase price for cigarettes also goes towards Michigan tobacco taxes. Michigan's alcohol taxes range from $2.00 per gallon of wine to $12.68 per gallon of spirits.

So while everyday groceries avoid sales tax in Michigan, major selective excise taxes apply to controlled or regulated substances.

Collecting sales tax in Michigan

Let’s look at the key steps for out-of-state sellers to collect Michigan sales tax correctly.

How to collect Michigan sales tax for out-of-state sellers

Out-of-state retailers and marketplace sellers with over $100,000 in Michigan sales or 200+ transactions must register to collect Michigan's 6% sales tax on taxable sales delivered into the state. This applies whether the remote seller uses Michigan or origin-based tax rates and rules for multistate filing purposes after meeting nexus thresholds.

There are two common ways out-of-state sellers reach nexus:

  • Having a physical presence in Michigan, like offices, inventory, employees/reps, or business property. Any physical presence automatically reaches nexus thresholds.
  • Exceeding Michigan's economic nexus thresholds:
  • $100,000+ in Michigan sales
  • 200+ separate Michigan transactions

Once nexus is reached, out-of-state sellers must complete the Michigan sales tax registration process online to obtain their 6% sales tax license.

With a Michigan seller's permit, remote sellers can proceed to:

  • Calculate 6% Michigan sales tax on taxable transactions
  • Collect tax from Michigan customers
  • File regular sales tax returns
  • Remit sales tax revenue to the Michigan Department of Treasury

Should you collect sales tax on shipping charges in Michigan?

In most cases, Michigan requires delivery fees and transportation charges associated with purchases of taxable tangible personal property to be included in the sales price subject to 6% sales tax.

For example, if an online retailer sells a $100 taxable item to a Michigan customer plus a $10 shipping fee, the total $110 charge is generally subject to current Michigan sales tax requirements.

Filing and paying sales taxes in Michigan

All businesses registered for a Michigan seller's permit must regularly file sales tax returns and remit collected revenue to the Michigan Department of Treasury.

Michigan sales tax return due dates

The table below shows monthly, quarterly, and annual due dates based on a seller's assigned filing frequency:

Monthly

Period Due Date
January February 20
February March 20
March April 20
April May 20
May June 20
June July 20
July August 20
August September 20
September October 20
October November 20
November December 20
December January 20

Quarterly

Period Due Date
Jan-Mar April 20
Apr-Jun July 20
Jul-Sep October 20
Oct-Dec January 20

Annual

Period Due Date
Jan 1-Dec 31 February 28

Penalties for late filing or payment

A 5% negligence penalty applies to late tax payments in Michigan. Interest compounds daily at an 8.25% annual rate on any unpaid amounts.

When are Michigan returns due?

Returns for monthly and quarterly periods are due the 20th of the following month. Annual reconciliation returns are due February 28 for the previous tax year.

Frequently asked questions

What are the Michigan sales tax due dates?

Michigan sales tax returns are due monthly, quarterly, or annually based on a seller's assigned filing frequency. Common due dates are the 20th of each month following the reporting period.

Do I need to file if no sales tax was collected?

Yes, you must file a zero return each period even if you did not collect any sales tax.

Can I extend the filing deadline or file a late/amended return?

Yes, late and amended returns can be filed in Michigan, but applicable penalties and interest will apply based on amounts owed and timing.

Filing extensions may be requested but must be submitted timely and require payment of estimated tax due for the period.

Michigan Sales Tax Audit & Appeal Process

The audit and appeals process refers to the procedures a business goes through if selected for a Michigan sales tax audit and wishes to contest any assessment findings.

The process begins when a business receives an audit notice letter from the Michigan Department of Treasury. The assigned auditor then reviews provided records and tax returns, compares them to filed amounts, and issues a post-audit assessment outlining any discovered discrepancies.

If a business disagrees with audit findings, they have the right to appeal through several levels: first with the auditor, then filing a petition with the Department's Hearings Division, and finally to the Michigan Tax Tribunal court if disputes remain unresolved administratively.

What to Expect During a Michigan Sales Tax Audit

In the information gathering phase, auditors request documentation on sales records, tax returns, accounting data, exemptions claimed, and more to verify all aspects of tax reporting were handled accurately.

The auditor compares filings to sales data to check for issues like unreported tax liabilities, improper exemptions, and unremitted use tax. Common disputes involve taxability determinations, exemption support, and use tax obligations from out-of-state purchases.

Appealing Audit Results in Michigan

The first appeals opportunity comes after the exit conference when the auditor issues their preliminary findings. Competent representation to dispute unfavorable determinations is vital before the final assessment.

If post-audit disputes remain, businesses can file a petition with the Michigan Department of Treasury's Hearings Division within 60 days of a Final Bill for Taxes Due. Further appeals are possible to the Michigan Tax Tribunal court.

Michigan Sales Tax Registration

Here are the key steps for registering for a 6% Michigan sales tax license:

How to Register for a Michigan Seller's Permit

Visit the Michigan Business One Stop Registration website and submit an eRegistration application with details on:

  • Business Information
  • Ownership structure
  • Locations
  • Tax types
  • Anticipated sales

Registration Requirements for Online Sellers

Remote sellers exceeding $100,000 in Michigan sales or 200+ transactions must register to collect sales tax. Physical presence is not required but also reaches the nexus.

Cost of Registration for a Michigan Sales Tax License

The State of Michigan charges no fee to register for a seller's permit in Michigan.

Agencies to Register Within Michigan

The Michigan Department of Treasury handles sales and use tax registrations and revenue administration for the State of Michigan. There are no local sales taxes or separate agencies.

More Michigan Sales Tax Resources & Contact Information

For help with Michigan sales tax questions, filing, audits, and appeals, contact:

There you have it—a comprehensive guide on Michigan's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.

Sales tax at a glance

State taxing authority Michigan Department of Treasury
Michigan base sales tax rate 6%
Local tax rates None
2023 Michigan sales tax rate 6%
Tax threshold $100,000 in annual Michigan sales
Website Michigan Department of Treasury
Tax Line 517-335-7508

Michigan sales tax rates & calculations in 2023

The Michigan sales tax rate in 2023 is 6%. This comprises a base rate of 6%, as Michigan has no local sales taxes. The total sales tax can be as high as 6% for taxable transactions depending on the type of product sold or service rendered.

Recent tax rate changes in Michigan

There have been no recent changes to the Michigan state sales tax rate, which has remained at 6% since 1994.

FAQs

How do you calculate Michigan sales tax?

To calculate Michigan sales tax, you multiply the 6% state tax rate by the amount of a taxable sale. For example, if a product sells for $100, the sales tax would be $100 x 0.06 = $6.

What are the penalties for not paying Michigan sales tax?

Penalties for failing to pay Michigan sales tax include:

  • 5% negligence penalty
  • 25% fraud penalty
  • 0.5% monthly interest compounded daily

What’s the difference between destination-based and origin-based sales tax states?

Destination-based sales tax states tax sales based on where the customer receives the product. Origin-based sales tax states tax sales based on where the seller is located.

Is the Michigan sales tax destination-based or origin-based?

Michigan is a destination-based sales tax state, meaning sales tax is charged based on where the product or service is delivered to the customer.

Is Michigan a streamlined sales tax state?

Yes, Michigan is a full member state of the Streamlined Sales and Use Tax Agreement (SSUTA).

Sales tax nexus table in Michigan

Type of nexus Threshold
Physical presence Any physical presence
Economic nexus $100,000 in sales or 200 transactions
Nexus with marketplaces None
Payroll or property $350,000 payroll or $50,000 property

FAQs

Do I need a Michigan seller's permit if I’m only a wholesaler?

No, you do not need a Michigan seller's permit if you only sell goods wholesale for resale and provide your buyers with a valid resale certificate. Wholesalers still need to keep documentation in case of audit.

Do I need a Michigan seller's permit if I only sell temporarily in the state?

Yes, even a single temporary sales trip into Michigan can reach sales tax nexus, requiring a seller's permit and tax collection. There is no small seller exception in Michigan sales tax laws.

What's exempt in Michigan

Major categories of products exempt from Michigan sales tax include:

  • Most grocery food for home consumption
  • Prescription and nonprescription medicines for humans
  • Agricultural equipment and products
  • Industrial processing equipment
  • Interstate motor carrier rolling stock

Full details available in the Michigan Sales and Use Tax Exemptions Guide.

FAQs on taxability

Are groceries taxable in Michigan?

No, most grocery food items for home consumption are exempt from Michigan sales tax under the food exemption. Some prepared food may be taxed. See full grocery guidelines.

Is clothing taxable in Michigan?

Yes, clothing and footwear are generally taxable in Michigan unless specifically exempted, such as certain work clothes.

Are digital products taxable in Michigan?

Digital products like music, movies, ebooks, and downloaded software are not subject to Michigan sales tax as tangible personal property.

Is software-as-a-service (SaaS) taxable in Michigan?

No, software-as-a-service (SaaS), cloud software, and hosted software are not taxable in Michigan as electronically delivered software or communication services.

Are services taxable in Michigan?

Most services are not taxable in Michigan. However, some taxable services include accommodation rentals, telecom services, and installation/repair services to the property. 

No General Food and Beverage Tax in Michigan

While food and beverages are broadly exempt from Michigan's 6% sales tax, the state does levy selective excise taxes on certain items like liquor, tobacco, marijuana products, and soda.

For example, Michigan has a $0.52 per gallon excise tax on soda syrups and soft drinks sold to retailers. There are also extensive "sin taxes" on alcoholic beverages and tobacco products. However, no broad-based tax applies to grocery food and non-alcoholic drink sales.

Taxability of Alcohol, Tobacco, and Marijuana

Michigan levies a 16% excise tax on retail cannabis sales instead of the general 6% sales tax. Over 43% of the pretax purchase price for cigarettes also goes towards Michigan tobacco taxes. Michigan's alcohol taxes range from $2.00 per gallon of wine to $12.68 per gallon of spirits.

So while everyday groceries avoid sales tax in Michigan, major selective excise taxes apply to controlled or regulated substances.

Collecting sales tax in Michigan

Let’s look at the key steps for out-of-state sellers to collect Michigan sales tax correctly.

How to collect Michigan sales tax for out-of-state sellers

Out-of-state retailers and marketplace sellers with over $100,000 in Michigan sales or 200+ transactions must register to collect Michigan's 6% sales tax on taxable sales delivered into the state. This applies whether the remote seller uses Michigan or origin-based tax rates and rules for multistate filing purposes after meeting nexus thresholds.

There are two common ways out-of-state sellers reach nexus:

  • Having a physical presence in Michigan, like offices, inventory, employees/reps, or business property. Any physical presence automatically reaches nexus thresholds.
  • Exceeding Michigan's economic nexus thresholds:
  • $100,000+ in Michigan sales
  • 200+ separate Michigan transactions

Once nexus is reached, out-of-state sellers must complete the Michigan sales tax registration process online to obtain their 6% sales tax license.

With a Michigan seller's permit, remote sellers can proceed to:

  • Calculate 6% Michigan sales tax on taxable transactions
  • Collect tax from Michigan customers
  • File regular sales tax returns
  • Remit sales tax revenue to the Michigan Department of Treasury

Should you collect sales tax on shipping charges in Michigan?

In most cases, Michigan requires delivery fees and transportation charges associated with purchases of taxable tangible personal property to be included in the sales price subject to 6% sales tax.

For example, if an online retailer sells a $100 taxable item to a Michigan customer plus a $10 shipping fee, the total $110 charge is generally subject to current Michigan sales tax requirements.

Filing and paying sales taxes in Michigan

All businesses registered for a Michigan seller's permit must regularly file sales tax returns and remit collected revenue to the Michigan Department of Treasury.

Michigan sales tax return due dates

The table below shows monthly, quarterly, and annual due dates based on a seller's assigned filing frequency:

Monthly

Period Due Date
January February 20
February March 20
March April 20
April May 20
May June 20
June July 20
July August 20
August September 20
September October 20
October November 20
November December 20
December January 20

Quarterly

Period Due Date
Jan-Mar April 20
Apr-Jun July 20
Jul-Sep October 20
Oct-Dec January 20

Annual

Period Due Date
Jan 1-Dec 31 February 28

Penalties for late filing or payment

A 5% negligence penalty applies to late tax payments in Michigan. Interest compounds daily at an 8.25% annual rate on any unpaid amounts.

When are Michigan returns due?

Returns for monthly and quarterly periods are due the 20th of the following month. Annual reconciliation returns are due February 28 for the previous tax year.

Frequently asked questions

What are the Michigan sales tax due dates?

Michigan sales tax returns are due monthly, quarterly, or annually based on a seller's assigned filing frequency. Common due dates are the 20th of each month following the reporting period.

Do I need to file if no sales tax was collected?

Yes, you must file a zero return each period even if you did not collect any sales tax.

Can I extend the filing deadline or file a late/amended return?

Yes, late and amended returns can be filed in Michigan, but applicable penalties and interest will apply based on amounts owed and timing.

Filing extensions may be requested but must be submitted timely and require payment of estimated tax due for the period.

Michigan Sales Tax Audit & Appeal Process

The audit and appeals process refers to the procedures a business goes through if selected for a Michigan sales tax audit and wishes to contest any assessment findings.

The process begins when a business receives an audit notice letter from the Michigan Department of Treasury. The assigned auditor then reviews provided records and tax returns, compares them to filed amounts, and issues a post-audit assessment outlining any discovered discrepancies.

If a business disagrees with audit findings, they have the right to appeal through several levels: first with the auditor, then filing a petition with the Department's Hearings Division, and finally to the Michigan Tax Tribunal court if disputes remain unresolved administratively.

What to Expect During a Michigan Sales Tax Audit

In the information gathering phase, auditors request documentation on sales records, tax returns, accounting data, exemptions claimed, and more to verify all aspects of tax reporting were handled accurately.

The auditor compares filings to sales data to check for issues like unreported tax liabilities, improper exemptions, and unremitted use tax. Common disputes involve taxability determinations, exemption support, and use tax obligations from out-of-state purchases.

Appealing Audit Results in Michigan

The first appeals opportunity comes after the exit conference when the auditor issues their preliminary findings. Competent representation to dispute unfavorable determinations is vital before the final assessment.

If post-audit disputes remain, businesses can file a petition with the Michigan Department of Treasury's Hearings Division within 60 days of a Final Bill for Taxes Due. Further appeals are possible to the Michigan Tax Tribunal court.

Michigan Sales Tax Registration

Here are the key steps for registering for a 6% Michigan sales tax license:

How to Register for a Michigan Seller's Permit

Visit the Michigan Business One Stop Registration website and submit an eRegistration application with details on:

  • Business Information
  • Ownership structure
  • Locations
  • Tax types
  • Anticipated sales

Registration Requirements for Online Sellers

Remote sellers exceeding $100,000 in Michigan sales or 200+ transactions must register to collect sales tax. Physical presence is not required but also reaches the nexus.

Cost of Registration for a Michigan Sales Tax License

The State of Michigan charges no fee to register for a seller's permit in Michigan.

Agencies to Register Within Michigan

The Michigan Department of Treasury handles sales and use tax registrations and revenue administration for the State of Michigan. There are no local sales taxes or separate agencies.

More Michigan Sales Tax Resources & Contact Information

For help with Michigan sales tax questions, filing, audits, and appeals, contact:

There you have it—a comprehensive guide on Michigan's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.

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About the author

Deb Mukherjee

Deb is the head of marketing at Numeral. He has worked with the likes of Shopify and Wonderment and has helped countless ecommerce stores scale seamlessly. With a background in finance, he often finds himself advising stores on sales tax and good financial systems.

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