collects a 6% state sales tax—or use tax—on the sale price of all new and used motor vehicle purchases when the new vehicle is registered with the Secretary of State.
Counties and cities do not assess any car taxes in Michigan, so you can always expect to pay the Michigan sales tax rate of 6% no matter where you live in the state.
Individuals who buy or receive a gifted car from an immediate family member (spouse, parent, sibling, child) are exempt from paying Michigan car sales tax.
Trade-in credits and dealer rebates are not subject to sales taxes in Michigan, but manufacturer rebates and other incentives are.
Michigan sales tax on cars: 6%
The state car sales tax rate in Michigan is 6% for all new and used car purchases. Counties and cities do not assess any additional local taxes under Michigan tax law.
When to pay: The vehicle purchases is responsible for paying sales tax at the time of
: The leasing company will typically charge a 6% use tax (in lieu of a sales tax) on monthly lease receipts to be submitted directly to the Michigan Department of Treasury.
The bottom line: You’ll need to factor a 6% tax into your budget when deciding how much you can spend to buy or lease a new or used car.
There is only one car sales tax exemption in Michigan: Buying or receiving a gifted vehicle from an immediate family member. Immediate family members are limited to:
for a $4,000 credit. You will only have to pay 6% sales tax on $26,000.
The same principle applies to dealer rebates—but not manufacturer rebates. If your dealer offered a unique $1000 rebate in the scenario above, you would pay tax on $25,000, but you would still pay tax on $26,000 if this rebate came from the manufacturer.
Key Takeaway When buying a car in Michigan, the trade-in value offered by a dealership as part of your transaction is subtracted from the purchase price before the sales tax is added.
MORE: How to negotiate the best car price
How to calculate sales tax on a car in Michigan
You don’t need a sales tax calculator to figure out the total cost on your Michigan vehicle purchase—just some simple math:
Subtract any trade-in credits and applicable dealer rebates from your car’s sticker price.
Multiply this number by 1.06 for the total cost, OR
Multiply this number by 0.06 to isolate the cost of tax.
Keep in mind: Other fees you may be subject to vary by dealership and financing method.
How to estimate Michigan tax, title, and registration fees
Review the information in this table to estimate all the additional costs associated with car purchases in Michigan: