Michigan Sales Tax

Michigan Sales Tax is 6%, and it’s applied to all taxable sales in the state. Michigan’s sales tax structure isn’t one-size-fits-all. Different state, county, and city rates affect residents and businesses alike, impacting budgeting and financial planning. Understanding how these taxes work is key for anyone doing business in Michigan. A company’s sales tax nexus in a state depends on whether it has a physical presence there, such as offices, inventory, employees or representatives, storage space, or advertising links on a Michigan-based website. However, companies with no physical presence in the state may also have nexus via economic activity, such as $100,000 in annual sales or 200 separate sales transactions.

Michigan Sales Tax Exemptions

Depending on your industry, you may qualify for exemptions or lower rates. To be eligible for these benefits, you must submit a completed exemption claim form to the Department of Treasury.

Some goods are exempt from Michigan sales tax, including prescription medications, newspapers, and secondhand items. Additionally, Michigan sales tax exemptions apply to some professional services.

The state of Michigan also offers sales and use tax exemptions, including those for businesses operating in Enterprise Zones. In addition, the state occasionally holds sales tax holidays for specific items

Michigan Sales Tax Due Dates

One of the most common mistakes that businesses make is missing sales tax filing deadlines. To avoid this, make sure you’re aware of your assigned filing frequency and corresponding due dates. Also, keep a calendar or set reminders to help you remember when to file. If you’re new to sales tax, hiring an accountant or bookkeeper with expertise in this area is a good idea. This will help you avoid costly errors and stay compliant with Michigan sales tax regulations.

Businesses that owe sales tax are required to file a return and remit the collected tax monthly, quarterly, or annually. The Michigan Department of Treasury assigns each business a filing frequency based on its estimated activity level.

If the filing due date falls on a weekend or holiday, it will be extended to the next business day. Late filing and remittance of sales tax can result in penalties. The state requires that all returns be filed and paid on time. If you miss a return or payment deadline, you’ll be subject to a penalty that starts at 5% of the unpaid tax for the first two months and then increases up to 25% each month thereafter.