Michigan is a state located in the Midwestern and Great Lakes region of the United States of America. It is the tenth most populous and 11th most extensive by area among the 50 United States.
The state offers limitless outdoor recreation, spectacular landscapes, affordable living, a favorable business environment, healthy business growth, which attracts millions of tourists and residents every year.
Are you considering a move to Michigan for starting, relocating, or expanding your business? Well, there's a sea of information to know about the Michigan Sales Tax. To help out, DrEmployee has put together this convenient MI Sales Tax guide along with a handy Michigan Sales Tax Calculator.
So let's explore!
Businesses and Sellers involved in sales of tangible personal property, to the end consumer and have Nexus in Michigan are required to register for Michigan Sales tax. They are required to collect, manage, and remit the sales tax on the total price (including shipping and handling charges) of their taxable retail sales to the Michigan Department of Treasury while staying in compliance with state laws and avoid penalties and interest.
The sales tax determined on four factors:
To calculate Sales Tax in Michigan, follow the steps below:
As a business owner, you are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in Michigan State. And to determine your Nexus in Michigan, you must have any of the following:
The next step is to deduce the Sales Tax rate (State + County + City) applicable to your product once you have determined that your Nexus is with Michigan. However, no city or county in Michigan levy additional local sales tax, so a statewide rate of 6% of sales tax would be applied all across the state.
After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.
Example # 1:
For instance, you sell a Massaging Chair on your store in Ann Arbor, Michigan, having a net cost of $650. The amount of Sales Tax that you have to pay on the Massaging Chair would be:
Net Price (amount before Tax) of a Massaging Chair: $650
Total Sales Tax rate: 0.00% (Ann Arbor) + 0.00% (Washtenaw County) + 6.00% (Michigan State) = 6.00%
Total Sales Tax amount = $650 x 6% = $39
Gross Price (Amount after Tax) = 650 + 39 = $689
So the Sales Tax amount charged on the Massaging Chair would be $39, raising the gross cost of it to $689.
Using our Sales Tax Calculator:
All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:
Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:
In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.
But there are also instances when you are required to deduce how much Sales tax you have actually paid on a product in Michigan.
This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Michigan Sales Tax Calculator can perform this calculation like a Pro.
The gross cost (amount after tax) of a Single Bed is $1700, which you sell on your store in Lansing, Michigan. Now, if you want to deduce the amount of sales tax you have actually paid on it and the net cost (amount before tax) of a Single Bed, you can follow the steps below:
Gross Price (Amount after Tax) of Single Bed: $1700
Total Sales Tax rate: 0.00% (Lansing) + 0.00% (Ingham County) + 6.00% (Michigan State) = 6.00%
Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]
1700 = [Net Price x ((6/100) + 1)]
1700 = Net Price x 1.06
$1604 = Net Price
So the original Price (net price) of the Single Bed would be $1604.
Using our Sales Tax Calculator:
You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:
Our calculator will automatically calculate the result and represents it in 3 different forms.
Answer: Michigan's General Sales Tax rate levied on the state level is 6%. Fortunately, no county, cities, and/or municipalities levy an additional sales tax.
Answer: Prescription drugs, magazines/newspapers, and groceries are exempted from Michigan Sales Tax.
Answer: Use tax is a companion tax to sales tax. It is charged at a similar rate as a sales tax of 6%. Buyers are required to pay use tax if they buy goods from out-of-state sellers, through the internet, or by mail that does not collect and remit sales tax or use tax from their customers.
Answer: The annual sales tax in Michigan should be paid before the due date of February 28.
Answer: Yes, shipping and handling charges involved in sales of tangible personal property are subjected to Michigan Sales Tax.