Car Sales Tax in Michigan
The Michigan vehicle sales tax is 6% across the state and is collected when you register your vehicle.
Written by Rob Shapiro
Edited by Pat Roache
The State of Michigan 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.
- 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 vehicle registration. However this may vary depending on how you buy your car:
- Buying from a vehicle dealer: Your car dealer will charge the sales tax and submit the tax due to the Secretary of State (SOS).
- Buying from a private sale: Pay the 6% sales tax based on your car’s purchase price when you register your car at the SOS.
- Leasing a car: 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.
MORE: How to pay Michigan excise tax
Exemptions from Michigan car sales tax
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:
- A spouse
- A parent
- A sibling
- A child
Car trade-ins of up to $9000 are not taxed in Michigan
Michigan tax law allows up to $9000 in trade-in credit to be deducted from the taxable price of the vehicle if you opt to trade in a car.
For example: Let’s say you’re buying a Dodge Durango for $30,000 from a Michigan dealership, and part of the transaction includes trading in your old Ford Edge 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:
Cost | Average cost |
|---|---|
Sales tax | 6% |
Registration fee | $15 |
Title transfer fee | $15 |
Plate transfer | $10 |
Documentation fee | $165 on average with a $190 limit |
MORE: How to register a car in Michigan
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How much is sales tax on a used car in Michigan?
Michigan charges a 6% sales tax on all purchases for new and used cars.
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