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Key takeaways
- Michigan has a base sales tax of 6% and no local taxes.
- You're legally required to collect sales tax if you have a physical presence in the state. The same applies if you exceed $100,000 in annual sales or 200 transactions with Michigan customers in a calendar year.
- If you don't have a sales tax permit yet, you can register online. It's fast, free, and convenient.
- Upon registration, you must file monthly, quarterly, or annually, based on your assigned filing frequency, even if you didn't collect sales tax during that period.
- The penalty for late filing starts at 5% per month, plus interest.
Michigan sales tax rates: overview
The Michigan sales tax rate in 2025 is 6%. This comprises a base rate of 6%, as Michigan has no local sales taxes. Sales tax on natural or artificial gas, electricity, and home heating fuels for residential use is set at 4%.
To calculate Michigan sales tax, 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.
Sales Tax 101: Forty-five states, including Michigan, require retail businesses to collect and remit sales tax. This charge generally applies to clothing, electronics, furniture, toys, and other goods categorized as tangible personal property.
The taxability of digital products is a bit more complex because each state has different rules for taxing eBooks, software, streamed content, and downloads. That's one area where Numeral can help. We manage everything sales tax-related, from registrations and filings to remittance and ongoing compliance.
Recent tax rate changes
Michigan updated its sales and use tax rules in August 2023 to make them clearer and more in line with current laws. Most of these regulations haven’t been amended since 1979.
For example, the tax laws governing discounts, coupons, and rebates (R205.22) have been updated, particularly for motor vehicle sales. Several other rules and regulations were removed as they were no longer current.
One aspect to be aware of is that filing frequency requirements are reviewed annually by the state’s Department of Treasury. Since they may undergo changes, it’s important to check them each year to ensure you're filing on the correct schedule.
Do I need to collect Michigan sales tax?
Any retailer with a physical or economic nexus in Michigan must collect sales tax. Ecommerce businesses are no exception.
Nexus: What it means and how it affects your business
Physical nexus
Physical nexus means your business has a physical connection to a state that requires you to collect and remit sales tax there. This could include a brick-and-mortar store, a warehouse or fulfillment center, employees, sales representatives, or contractors.
If you have a physical nexus in Michigan, you must register for a sales tax permit in the state. Failure to do so can result in back taxes, penalties, and interest.
Economic nexus
Economic nexus arises when your company's revenue or sales activity reaches certain thresholds in a state. Companies with economic nexus in multiple states must collect sales tax in each state where they meet the required thresholds.
In Michigan, economic nexus is established when a remote seller or marketplace facilitator exceeds $100,000 in annual retail sales or 200 transactions in the state.
Out-of-state (remote) sellers
Remote sellers can create nexus without realizing it, given the legal complexities involved.
For example, setting up a booth at an expo or trade show in Michigan can trigger a physical nexus. The same can happen if you use a fulfillment center like Amazon FBA. Any inventory stored in the state can create a physical presence, resulting in tax obligations.
TIP: Out-of-state sellers that unknowingly establish nexus in Michigan may qualify for Voluntary Disclosure. With this option, they can voluntarily report unpaid sales tax, potentially benefiting from penalty waivers and a lookback period of up to 48 months. Once approved, they must commit to ongoing compliance by collecting sales tax and filing the appropriate returns.
Is Michigan’s sales tax destination-based or origin-based?
Michigan is a destination-based state, meaning sales tax is charged based on where the product or service is delivered to the customer.
What’s the difference between destination-based and origin-based sales tax states?
In destination-based states, sales tax is based on the buyer’s location. In origin-based states, it's based on the seller’s location.
TIP: If you use multiple warehouses or delivery options, calculate sales tax based on the customer’s delivery address. Otherwise, you risk charging the wrong tax rate.
What's taxable?
The 6% sales tax applies to retail sales of books, jewelry, makeup products, clothing, and other tangible personal property. See the examples below:
- Home appliances
- Fashion accessories
- Video games
- Toys
- Office supplies
- Automotive parts
- Sports equipment
- Pet supplies
Which ecommerce goods are taxable?
With a few exceptions, most ecommerce products are subject to Michigan sales tax. These include but are not limited to:
- Computers
- Smartphones
- Furniture and home decor items
- Personal care products
- Camping gear
- Apparel and footwear
- Giftware
Is software-as-a-service (SaaS) taxable in Michigan?
No, SaaS is not taxable in Michigan. This includes cloud software and hosted software. Software is only taxed if there is a downloadable component (in such cases, it’s considered “prewritten software”).
Sales tax exemptions
Food and non-alcoholic drink sales, except for prepared beverages, such as those served at cafés, or food products sold for immediate consumption, are not subject to sales tax.
Other categories of products exempt from Michigan sales tax include:
- Prescription drugs and over-the-counter drugs prescribed by a healthcare provider
- Food and food ingredients (except food products intended for immediate consumption)
- Sales to the U.S. government, schools, churches, and nonprofit hospitals
- Agricultural equipment and products
- Industrial processing equipment
- Interstate motor carrier rolling stock
- Wholesale goods
Excise taxes in Michigan
Retail marijuana sales are subject to a 10% excise tax in addition to sales tax. There are also extensive "sin taxes" on alcoholic beverages and tobacco products.
Let’s see a few examples:
- 12-ounce beer: $0.02 excise tax
- 5-ounce glass of wine: $0.02 excise tax
- Cigarettes: $0.10 per piece or $2.00 per pack of 20
- Other tobacco products: 32% of the wholesale price
Drinks with less than 5% alcohol by volume are not considered alcoholic beverages, meaning they’re not subject to excise tax. However, Michigan charges a 6% sales tax on non-alcoholic drinks that are sold and served to customers for on-site consumption (e.g., in a bar or pub).
How to register for a Michigan sales tax permit
The state of Michigan makes it easy to apply for a seller’s permit. You can register and submit the required documents online in minutes.
Our experts can handle the sales tax registration process on your behalf. Let us help you save time and ensure everything goes smoothly.
If you prefer to do it yourself, visit Michigan Treasury Online (MTO) to create an online account. Submit your registration by sharing key details about your business, including:
- Employer Identification Number (if applicable)
- Ownership structure
- Locations
- Tax types
- Anticipated sales
The Michigan Department of Treasury will review your application and issue your sales tax license within seven business days. This service is free.
I didn't collect any Michigan sales tax. Do I still have to submit a return?
Yes, you must file a zero return each period, even if you did not collect sales tax.
Michigan sales tax return filing schedule and due dates
All businesses registered for a Michigan seller's permit must regularly file sales tax returns and remit collected revenue to the state’s Department of Treasury.
Sales tax return due dates
In Michigan, the filing frequency depends on your estimated level of sales activity. Once you've completed your first tax year, the Treasury staff will set your future filing schedule based on the amount of tax you previously owed.
Returns for monthly and quarterly periods are due on the 20th of the following month. Annual reconciliation returns are due on February 28 for the previous tax year.
The table below shows monthly, quarterly, and annual due dates based on a seller's assigned filing frequency:
Monthly
Quarterly
Annual
Filing penalties
If you fail to file or pay your tax returns on time, you’ll be charged a 5% penalty fee for the first two months. After that, an additional 5% per month is charged until the penalty reaches a maximum of 25% of the total tax owed.
The state also charges daily interest on unpaid tax based on the annual rate set by the Department of Treasury. This rate was 9.47% between January 1, 2025, and June 30, 2025.
Audit & appeals 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.
Here’s a step-by-step breakdown of what to expect:
- Audit notification: Your company receives an official audit notice letter from the Michigan Department of Treasury. This document outlines the audit scope, periods covered, response deadlines, and other important information.
- Initial contact and scheduling: The auditor assigned to your business reaches out to schedule a meeting. They will let you know what documents are needed (e.g., sales tax returns, exemption certificates), where the audit will take place, and how long it's expected to last. Prepare the necessary documents before the meeting, ensuring all records are complete and readily accessible. Organize them by category and time period to have everything in order.
- Information review: Auditors compare your sales data, claimed exemptions, and purchase records to your filed tax returns. They will look for and flag discrepancies and other issues, such as unreported taxable sales or filing mistakes.
- Post-audit assessment: Once the assessment is completed, you'll receive a formal report summarizing the auditor's findings. The report will cover any discrepancies and proposed adjustments, as well as calculations for additional tax owed, penalties, and interest.
- Assessment review: Go over the report, then schedule a meeting with the auditor to discuss their findings and seek clarification. Present additional documents if necessary. This could be an opportunity to resolve the issue without filing a formal appeal.
The audit process typically begins 30 to 60 days after you receive the notice and lasts several months, giving you enough time to prepare the required documents and consult a tax professional. During the audit, you may need to submit additional paperwork and explain discrepancies, misclassified sales, or missing records.
Appealing audit results
If you’re not satisfied with the audit findings, you may request an informal conference with the Michigan Department of Treasury's Hearings Division within 60 days of a Final Bill for Taxes Due. If the outcome is unfavorable, you can further appeal to the Michigan Tax Tribunal within 60 days or the Michigan Court of Claims within 90 days.
The sales tax audit and appeals process can be difficult to navigate, especially for small business owners with limited knowledge of tax law. That’s why it’s important to seek professional help and use a sales tax automation platform that streamlines compliance, saving you time and preventing costly errors.
Sales tax FAQs
Is Michigan a streamlined sales tax state?
Yes, Michigan is a full member state of the Streamlined Sales and Use Tax Agreement (SSUTA). This means it adheres to the standards set by SSUTA, an initiative designed to simplify sales tax compliance.
Are groceries taxable in Michigan?
No, most groceries for home consumption are exempt from Michigan sales tax under the food exemption. Pre-made salads, pre-packaged meals from carry-out restaurants, hot foods sold at grocery stores or delis, and other prepared foods may be taxed.
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 custom software are not subject to Michigan sales tax as tangible personal property. Prewritten computer software is taxable.
For example, you are not required to collect sales tax on online courses, webinars, NFTs, and other digital goods without a tangible component. Software maintenance contracts, desktop agents, and other digital products or services that include prewritten software, however, are subject to sales tax.
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.
Do I need a Michigan seller's permit if I’m a wholesaler?
No, you don’t need a Michigan seller's permit if you sell wholesale goods for resale (e.g., to other wholesalers or retailers) and provide your buyers with a valid resale certificate.
Do I need a Michigan seller's permit if I only sell temporarily in the state?
Anyone who sells tangible personal property (e.g., clothing, jewelry, or electronics) in Michigan to the final customer must apply for a seller’s permit. This requirement applies to both individuals and businesses.
Say you run a small handmade jewelry business online and travel to Michigan monthly to sell at a craft fair. In this case, you must register for sales tax.
However, if you’re only selling temporarily in Michigan (e.g., at one or two events per year), you don’t need a full seller’s permit. Instead, you can use Form 5089, Concessionaire’s Sales Tax Return and Payment, to report and remit sales tax for those specific events.
Should you collect sales tax on shipping charges?
As of April 2023, delivery charges are no longer taxable as long as they are listed separately on the invoice and properly recorded in the seller’s book. If these charges are bundled into the total price of the item, they become subject to the 6% sales tax.
Utilities (e.g., electricity and natural gas) must include delivery charges in the taxable amount, regardless of how they are listed. Therefore, they remain subject to sales tax.
Can I get an extension on filing my Michigan sales tax return?
Yes, you may request an extension, but the penalties and interest will apply based on the amount owed and the timing of the filing. Additionally, you must pay the estimated tax due by the original deadline.
Can I amend a sales tax return?
Yes, you can amend a Michigan sales tax return. The process depends on whether you're correcting a monthly/quarterly or annual return. Simply follow these steps:
- For monthly/quarterly returns, fill out Form 5092. Submit it electronically through the Michigan Treasury Online (MTO) system or by mail.
- For annual returns, complete and submit Form 5082 electronically (via the MTO) or by mail.
These documents are available on the Michigan Department of Treasury website. Select the tax year, then access and fill out the respective form.
Michigan sales tax information & contacts
For help with Michigan sales tax questions, filing, audits, and appeals, contact:
- Authority name: Michigan Department of Treasury
- Phone number: 517-636-6925
- Website: www.michigan.gov/taxes
There you have it, a comprehensive guide on Michigan's sales tax laws.
