Michigan Seeks to Exclude Trade-Ins from Sales Tax
- Oct 1, 2012 | Gail Cole

Michigan House Bill No. 5696 seeks to amend the General Sales Tax "so that sales tax would be charged on the difference (emphasis added) between the price of a new or used motor vehicle … and the agreed-upon value of any trade-in." The bill would apply to new or used titled watercraft, as well.
A summary of the bill, released by the House Fiscal Agency, specifies that no sales tax would be charged on "the agreed-upon value" of "a motor vehicle or titled watercraft used as part of payment" of a new or used vehicle or watercraft.
Under the bill, the following limitations would apply to the value of a motor vehicle used as payment:
- $7,500 in 2012
- $10,000 in 2013
- $12,500 in 2014
- No limitation in 2015 and subsequent years
If House Bill 5696 is enrolled as it now stands, Michigan revenue faces an estimated sales tax revenue reduction of $174 million the first full year and would increase to $220 million per year. The Michigan School Aid Fund, among others, would be impacted.
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