Michigan Sales Tax Exemptions / Tax Free Items Michigan: Sales Tax Handbook

Michigan:

What purchases are exempt from the Michigan sales tax?

While the Michigan sales tax of 6.00% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Michigan.

Sales Tax Exemptions in Michigan

In Michigan, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

Several examples of exemptions to the state's sales tax are vehicles which have been sold to a relative of the seller, certain types of equipment which is used in the agricultural business, or some types of industrial machinery.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Michigan:


Clothing

  6.%

Groceries

  EXEMPT

Prepared Food

  6.%

Prescription Drugs

  EXEMPT

OTC Drugs

  6.%

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in Michigan? Candy IS considered a grocery in Michigan
Is soda taxable in Michigan? Soda IS considered a grocery in Michigan

Are services, shipping, installation, etc taxable in Michigan?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Michigan sales tax see the Michigan sales taxability FAQ page.


Other tax-exempt items in Michigan

This table lists a number of additional categories of goods and services that are exempt from Michigan's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Michigan.

Category Exemption Status
Food and Meals
Grocery Food EXEMPT
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT
Utilities & Fuel EXEMPT
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT *
Newspapers and Magazines
Newspapers EXEMPT *
Occasional Sales
General Occasional Sales EXEMPT *
Optional Maintenance Contracts
General Optional Maintenance Contracts EXEMPT *
Services
Janitorial Services EXEMPT
Transportation Services EXEMPT
Software and Digital Products
Custom Software - Delivered on Tangible Media EXEMPT
Custom Software - Downloaded EXEMPT
Digital Products EXEMPT

* See notes in category taxability page for details



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Source: http://www.salestaxhandbook.com/michigan/sales-tax-exemptions