Sales Tax and Reverse Sales Tax Calculator Michigan

MICHIGAN [Multidirectional Calculator]
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  • Amount Before Tax ${{amountBeforeTax}}
  • Sales Tax Rate {{SalesTaxRate}}%
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  • Amount After Taxes ${{AmountAfterTaxes}}



Michigan – MI Sales Tax Calculator: User Guide

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!


Michigan Sales Tax Facts:

  • Michigan's General Sales Tax rate levied on the state level is 6%. Fortunately, no county, cities, and/or municipalities levy additional sales tax, so the sales tax rate would remain the same regardless of where you are within the state.
  • 4% rate of the sales tax rate is charged on the sales of electricity, natural or artificial gas, and home heating fuels for residential use.
  • Prescription drugs, magazines/newspapers, and groceries are exempted from Michigan Sales Tax.
  • The MI state's sales tax rate is higher than 71.2% of states in the US.
  • The recyclable carbonated beverages and restaurant meals are also subjected to a special service tax, which is technically not sales tax.
  • Shipping and handling charges are also subjected to Michigan Sales Tax.
  • Michigan Sales Tax Exemption Form can be used by individuals and companies on avail sales tax exemptions on the purchase of items for resale, improvement, or as raw materials.
  • All taxable items brought into Michigan or purchased from online stores from out-of-state retailers but are not subjected to Michigan sales tax are supposed to be subjected to Michigan Use tax, which is charged on the total price (including shipping and handling charges). The Use Tax rate is similar to the Sales tax rate of 6%.
  • Unfortunately, Michigan doesn't have any sales tax holidays.

How to calculate Sales Tax in Michigan?

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:

  1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
  2. Out of State Seller's Eligibility: Out of State Seller is only required to register, collect, and remit the sales tax to the authorities in the state if it falls under the criteria provided by the state.
  3. Location and Products or Services: The sales tax rate varies from product to product and location to location, so you must check the sales tax rate applicable to your product according to the product category, county, and city. However, as the sales tax rate is the same across Michigan, 6% of sales tax will be applied, regardless of zip code.
  4. Exemptions: Almost all goods are eligible for sales tax regulation under Michigan Law except Prescription drugs, magazines/newspapers, and groceries. Moreover, you can check with the Michigan Department of Treasury website for updated list goods and services sold in Michigan, subject to sales tax.

To calculate Sales Tax in Michigan, follow the steps below:


Step 1 – Determine your Nexus:

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:

  • Maintaining a physical location in Michigan, such as store and warehouse.
  • An employee or representative of the business present in Michigan.
  • A person is physically present in the state for more than one day.
  • A person who has an ownership or beneficial interest in a flow-through entity. The flow-through entity can take place directly or indirectly through 1 or more flow-through entities.
  • A person actively solicits sales in Michigan and has gross receipts of $350,000 or more sourced to Michigan.

Step 2 – Determine the Sales Tax Rate:

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.


Step 3 – Calculate Sales Tax:

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:


Manual Method:

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:

  1. Input the $650 Net Price of a Massaging Chair as Amount Before Tax
  2. Input or select 6% of the combined Sales Tax rate on the Tax Rate

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

michigan-sales-tax-calculator

Reverse Sales Tax Calculation

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.


Example:

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%


Manual Method:

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:

  1. Input the $1700 Gross Price of Single Bed as Amount after Tax
  2. Input or select 6.00% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

Also Check: Michigan Paycheck Calculator to Calculate your Paycheck in Michigan State including all taxes and take home pay.

FAQs

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.

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