Sales Tax Guide for Michigan

If you’re an entrepreneur or e-commerce seller doing business in Michigan, sales tax compliance isn’t something you can afford to overlook—even by mistake.

But what exactly do you need to know to get it right?

In this sales tax guide for Michigan, we’re breaking it all down: who needs to collect Michigan sales tax, how to register, what exemptions apply, how to file, and best practices that keep your business compliant and audit-proof.

Let’s dig in.

Michigan Sales Tax at a Glance

Sales Tax 101: The Basics for Michigan Businesses

What Is Sales Tax?

Sales tax in Michigan is a flat 6% on taxable goods and some services. The upside? There are no local sales taxes, so it’s consistent statewide.

Your Role as a Seller

You’re essentially the middleman. You collect the sales tax from your buyers and pass it on to the state via the Michigan Department of Treasury.

Sales Tax vs. Use Tax

Sales tax is collected by a seller at the time a customer makes a purchase. It applies when a buyer purchases taxable goods or services in a state where the seller has a tax obligation, also known as nexus. The seller collects this tax from the buyer and then remits it to the state.

For example, if you’re a Michigan-based business selling an item to a Michigan customer, you’ll charge them Michigan’s 6% sales tax at checkout and send that amount to the state.

Use tax, on the other hand, kicks in when a buyer purchases taxable goods but doesn’t pay sales tax at the time of sale— usually because the seller was out of state and not required to collect it.

In that case, the responsibility shifts to the buyer to self-report and pay the use tax directly to the state.

For instance, if your Michigan business buys office supplies from an out-of-state vendor who doesn’t charge tax, you’re required to pay use tax on that purchase to the Michigan Department of Treasury.

Confused? doola’s experts will explain it better, schedule a demo!

Do You Need to Collect Michigan Sales Tax?

If you’re selling to customers in Michigan, here’s the big question: do you actually need to collect sales tax?

Let’s walk through some quick checks:

Do you have nexus in Michigan?

That means a physical or economic connection to the state. If you’re using Amazon FBA and your inventory sits in a Michigan warehouse, or if you’ve got $100,000+ in Michigan sales or 200+ transactions annually, you’ve got an economic nexus.

And yes, that means you’re on the hook.

Are you selling taxable goods or services?

Tangible products like clothing or electronics? Taxable. Most digital downloads? Also taxable. But groceries, prescriptions, or nonprofit transactions may be exempt.

You need to know what you’re selling and whether it qualifies.

Are your buyers in Michigan, and do they owe sales tax?

If yes, and you’re not collecting it, that liability shifts to you, and it adds up fast.

E-commerce example: Let’s say you sell $1,000 worth of taxable products through your Shopify store to Michigan customers. That’s $60 in sales tax you’re responsible for collecting and remitting.

E-Commerce Implications: What Online Sellers Should Watch Out For

If you’re selling online, like through Shopify, or your own website, or a marketplace like Amazon or Etsy, you’ll need to pay close attention to where and how you’re triggering nexus.

• Using Amazon FBA? Your inventory could automatically create physical nexus in Michigan.

• Selling through Shopify? You’re responsible for handling all sales tax collection yourself.

• Selling through Amazon or Etsy? They usually collect and remit Michigan sales tax for you as part of marketplace facilitator laws— but it’s still your job to make sure it’s being done correctly.

What Happens If You Don’t Collect It: Penalties for Non-Compliance

If you’re ever audited and the Michigan Department of Treasury finds that you owe back taxes, you won’t just be on the hook for the unpaid amount. You could also face penalties and interest piled on top, turning a simple oversight into an expensive problem.

💡 Example: If you failed to collect $5,000 worth of taxable sales, that’s $300 in sales tax owed. Now add penalties and interest, and it’s a much bigger headache than just setting up compliance in the first place.

Unsure about nexus? Let doola analyze it for you.

Michigan Sales Tax Guide Nexus: A Deep Dive for E-Commerce

Here are a few types of Michigan sales tax nexus:

Physical Nexus Triggers

You have physical nexus if you have:

• An office

• Employees

• Inventory stored in Michigan (yes, that includes Amazon FBA stock)

Economic Nexus

If your sales exceed $100,000 or you have over 200 separate transactions in Michigan annually (since Oct 1, 2018), you’ve established economic nexus.

Pro Tip: Track your sales and transaction volume monthly.

Click-Through Nexus

If you have affiliates in Michigan generating sales, you may trigger click-through nexus. For example, a Michigan blogger generating $110,000 in sales for your brand? Nexus triggered.

Inventory in Michigan

Stored inventory equals physical presence. Check your Amazon Inventory Event Detail Report to confirm Michigan-based stock.

Trailing Nexus

Michigan may still consider you to have nexus up to 12 months after activity ends. So don’t unplug too early.

Track nexus easily with doola’s tools!

Michigan Sales Tax Rates and Sourcing for Online Sellers

When it comes to charging the right sales tax, Michigan keeps things simple— at least compared to other states.

2025 Rates: Flat and Uniform

As of 2025, Michigan’s sales tax rate is a flat 6% statewide. That means:

• State rate: 6%

• Local rate: 0%

• Combined rate: 6%

Unlike many other states, there are no additional city or county taxes in Michigan. Whether you’re selling to customers in Detroit or Grand Rapids, you’re charging the same rate, which is 6%.

That’s good news for sellers looking to stay compliant without the headache of multiple tax zones.

Origin-Based Sourcing Explained

Michigan is an origin-based sourcing state. That means you charge sales tax based on where your product ships from within Michigan, not where your customer lives in the state.

For example:

If you’re shipping from a warehouse or fulfillment center in Detroit, you charge 6% on every Michigan sale, because that’s where the product originates. No need to calculate different rates for Lansing, Ann Arbor, or Traverse City. It’s all 6%.

Marketplace Facilitator Rules

Under Michigan’s marketplace facilitator law (effective since 2019), major e-commerce platforms like Amazon or Etsy are responsible for collecting and remitting sales tax on your behalf for sales made through their websites.

Still, it’s your job to verify this in your seller dashboard. And don’t assume it to be always accurate.

You may still need to register with the state if you sell through other channels or manage sales off-platform (like on Shopify or your own site).

Need rate setup help across multiple platforms? doola’s got you covered. Schedule a demo with us today.

What’s Taxable in Michigan for E-Commerce Sellers?

In Michigan, most tangible personal property is taxable. That includes:

• Physical goods: Think apparel, electronics, beauty products, books, etc.

• Digital products: Downloads like eBooks, software, or movies are often taxable.

• Certain services: If a service is tied to a taxable product like installing a home appliance, then that service is also taxed.

If you’re selling on platforms like Shopify or Amazon, you need to clearly identify what you sell falls under these categories.

What’s Exempt in Michigan

Michigan does offer several exemptions, and these can apply to both what you sell and who you sell to.

Examples of exempt items:

• Most groceries (excluding prepared food or soda)

• Prescription medications

• Newspapers and periodicals

E-commerce tip: Digital subscriptions (like streaming access) may not be taxed the same way as one-time downloads. So, it’s worth checking the latest Michigan Department of Treasury guidance before assuming you’re in the clear.

Tax-Exempt Customers You Should Know About

Some customers qualify as tax-exempt even if the product itself is taxable. This includes:

• Nonprofit organizations

• Government agencies

• Buyers reselling the product (with a valid reseller certificate)

Pro tip: Always collect and store digital copies of their exemption certificates. If you’re ever audited and don’t have them on file, you could be liable for the uncollected tax.

Need help managing exemptions or verifying your product taxability? Contact our tax team today!

Registering for a Michigan Seller’s Permit as an E-Commerce Seller

If you’re selling taxable goods or services in Michigan, or meet economic nexus thresholds, then it’s your responsibility to register for a seller’s permit before collecting sales tax.

Here’s how to do it without any hassle.

Step 1: Confirm If You Have Nexus in Michigan

Before you begin, you need to determine whether your business has a sales tax nexus in the state. Nexus means a connection that triggers your responsibility to collect and remit sales tax.

You have nexus in Michigan if:

You made more than $100,000 in total sales to customers in Michigan during the current or previous calendar year, or you had 200 or more separate sales transactions with customers in Michigan in that same time frame.

If either of these applies to you, it’s time to register.

Step 2: Gather the Info You’ll Need

To complete the registration, make sure you have:

• Your EIN (Employer Identification Number): You can get this from the IRS or take doola’s help to obtain it

• Your legal business name: As registered with your state

• Business address: This can be your physical or mailing address

• Sales estimates: Either monthly or annual, to help Michigan assign your filing frequency

Step 3: Register Online or by Mail

You have two ways to register:

• Online: The fastest and easiest option is the Michigan Treasury Online (MTO) portal. It’s free, secure, and gives you access to file future sales tax returns too.

• Offline: Alternatively, you can complete Form 518, Michigan’s official registration form, and mail it to the Department of Treasury.

💡 Tip: Most e-commerce sellers go with the MTO portal. It’s faster and lets you manage everything in one place.

Want someone else to handle it for you? Register stress-free with doola. Start today!

Out-of-State Sellers: You Still Need to Register

Even if your business is not physically located in Michigan, you may still be required to register for a Michigan seller’s permit if you meet the state’s economic nexus threshold of

More than $100,000 in gross sales to Michigan customers in a calendar year, or, 200 or more separate transactions shipped to Michigan buyers

This applies whether you’re selling through Shopify, Amazon FBA, Etsy, eBay, or your own website.

💡 Pro tip: If you use Amazon FBA and your inventory is stored in a Michigan warehouse, that counts as having a physical presence in the state, also known as physical nexus. And yes, that means you’re legally required to register for a Michigan seller’s permit and start collecting sales tax.

Selling in Multiple States? Michigan Is Part of the SST

Michigan is a member of the Streamlined Sales Tax (SST) Agreement, a multi-state initiative that simplifies sales tax compliance for businesses selling in more than one state.

Benefits of SST for e-commerce sellers:

• Register once to get permits in multiple participating states

• Use certified tools that simplify collection and remittance

• Access uniform tax rules across states

If you sell to customers across the U.S., SST can save you hours of manual work.

Acquiring an Existing Business in Michigan? Here’s What to Know

If you’re buying an existing e-commerce store or business that already sells in Michigan, don’t skip this step:

You’ll need to update the Michigan Department of Treasury with the new ownership details.

Failing to do so can cause delays in tax filings, and worse, you might end up being held responsible for the previous owner’s tax liabilities.

Before you take over, always check whether the seller’s permit tied to the business needs to be closed or transferred. A quick update now can save you from a lot of confusion later.

Need help navigating this process?

👉 Register your Michigan seller’s permit with doola.

Collecting Sales Tax: E-Commerce Best Practices

Once you’ve registered for your Michigan seller’s permit, the next step is setting up your sales tax collection the right way, especially if you sell through an online platform.

Platform-specific Sales Tax Settings

If you sell on Amazon or Etsy, you’re in luck. These platforms are considered marketplace facilitators, which means they’re required by law to collect and remit Michigan sales tax on your behalf.

That said, it’s still your job to log in and verify that tax is being collected correctly. Don’t assume. It’s your responsibility to check.

If you’re using Shopify, things work differently. Shopify doesn’t collect tax for you as we’ve mentioned earlier. You need to manually set Michigan’s 6% sales tax rate in your Shopify dashboard. This is a must if you want to stay compliant and avoid costly mistakes.

If you’re using a mobile point-of-sale system like Square, the app usually uses GPS to determine the correct rate, so in Michigan, it should automatically apply 6%.

If you forget to charge sales tax at checkout, you can’t go back and ask the customer later. They’ve already paid, and chasing them down doesn’t work.

So, if you miss it, the tax comes out of your pocket. Make sure your systems are set up to calculate and apply tax before the transaction happens.

Automate Where It Makes Sense

If you’re selling across multiple states, or just want peace of mind, then automation can be a lifesaver. Tools like doola, through their partnership with Hands Off Sales Tax, integrate with platforms like Shopify to apply real-time Michigan tax rates to every order.

Want to make this even easier? In case you didn’t know, doola partners with trusted automation tools to help e-commerce sellers stay fully compliant.

Filing and Remitting Michigan Sales Tax for Online Sellers

Once you’ve collected sales tax from your Michigan customers, the next step is to file and send it to the state. This part is just as important, because even if you collect correctly, filing incorrectly (or forgetting altogether) can cost you in penalties and interest.

Here’s how to do it right, and avoid late fees.

Filing Process

You’ll file your returns electronically through the Michigan Treasury Online (MTO) portal or by using Form 5080, which is the state’s standard sales and use tax return form.

When you file, you’ll need to report:

• Your total gross sales for the period

• How much Michigan sales tax you collected

• Any deductions or exemptions claimed (e.g., resale purchases, tax-exempt customers)

If you’re wondering how to file Michigan sales tax online, MTO is the fastest and most efficient route. You can save your business details, view previous filings, and even schedule payments.

Filing Frequency

Michigan assigns your filing schedule based on how much tax you collect. Here’s how it breaks down:

• Monthly: If you collect more than $720/month

• Quarterly: If you collect between $61–$720/month

• Annually: If your average collection is under $60/month

No matter the frequency, all returns are due by the 20th of the following month. For example, your June sales return is due by July 20th.

Adjustments for 2025 Filing Deadlines

If the 20th falls on a weekend or public holiday, the deadline moves to the next business day. So, a return due on Saturday, April 20, would be due on Monday, April 22.

Even If You Made No Sales…

You’re still required to file a zero return. If your Etsy or Shopify store had a slow month with no sales, don’t skip the return. Not filing can lead to penalties, even if you don’t owe any tax.

If You’re Closing or Selling the Business

If you shut down your business or sell your e-commerce store to someone else, there’s one final thing to do: submit a final sales tax return and update the Michigan Treasury with new ownership details.

Skipping this step could cause confusion or leave you responsible for taxes owed by the new owner, definitely not something you want on your plate.

👉 File confidently and stay compliant— get started with doola’s support

Special E-Commerce Considerations: Holidays and Shipping

Even if you’ve got the basics of Michigan sales tax down, there are a couple of extra rules that often trip up online sellers.

Let’s talk about two important ones: sales tax holidays and how shipping gets taxed in Michigan.

Michigan Sales Tax Holidays: What to Expect (or Not)

Michigan doesn’t do sales tax holidays. Unlike states like Tennessee or New Jersey, Michigan hasn’t passed legislation for temporary tax-free shopping days in 2025.

But that could change. So, if you’re running an e-commerce business and hoping to offer “tax-free weekend” promos, keep an eye on the state’s legislation.

A change in policy could affect your pricing, your marketing campaigns, and how you handle checkout tax settings.

How Shipping & Handling Are Taxed in Michigan

In Michigan, shipping charges are taxed only if the item being sold is taxable.

Let’s say your customer buys two items, one taxable and one tax-exempt. The portion of the shipping cost that applies to the taxable item? Yes, that gets taxed. But the part that goes with the exempt item? That stays tax-free.

So, it’s not about the shipping itself, it’s about what’s inside the box.

Example, if your cart has a $50 taxable item and a $50 exempt item, only the shipping tied to that $50 taxable item will be taxed.

Pro tip: If your platform lets you split shipping allocations by item, use it.

Michigan Excise Taxes for E-Commerce Sellers

When running an e-commerce business in Michigan, it’s crucial to understand that certain products are subject to excise taxes, special taxes levied on specific goods, separate from the standard sales tax.

What Are Excise Taxes?

Excise taxes are additional charges imposed on particular products, often to regulate consumption or generate revenue for specific public services.

Unlike the general sales tax, which applies broadly, excise taxes target specific items and can significantly impact pricing and compliance requirements for sellers.

Relevant Examples for E-Commerce

If your online store offers any of the following products to Michigan residents, be aware of the associated excise taxes:

• Tobacco Products: Michigan imposes a tax of $2.00 per pack of cigarettes. E-commerce sellers shipping tobacco products to Michigan must adhere to these tax regulations.

• Motor Fuels: As of January 1, 2025, gasoline and diesel fuel are taxed at $0.31 per gallon. If your e-commerce business involves selling fuel products to Michigan customers, these rates apply. Source: State of Michigan | Michigan.gov

• Marijuana Products: Recreational marijuana sales are subject to a 10% excise tax on the retail price, in addition to the standard 6% sales tax. E-commerce platforms dealing with legal cannabis products must incorporate these taxes into their pricing structures. Source: State of Michigan | Michigan.gov+1MI Tax CPA+1

• Alcoholic Beverages: Michigan taxes beer at $0.20 per gallon and wine at $0.51 per gallon (or $0.76 if the alcohol content exceeds 16%). Liquor sales are state-controlled, and specific regulations apply. Source: Kiplinger.com

E-commerce Tip: If your online store specializes in niche products like vape pens or other items that might fall under excise tax categories, it’s imperative to verify the applicable tax obligations. Ensuring compliance not only avoids legal complications but also maintains the integrity and reputation of your business.

Unsure about excise taxes? doola can clarify, book a demo!

Avoiding Penalties: E-Commerce Compliance Tips

Here’s what you need to know to stay ahead of the curve and keep your e-commerce operation running smoothly.

Penalty Breakdown

Let’s be real, mistakes happen all the time. But when it comes to sales tax, Michigan isn’t exactly forgiving.

If you miss a filing deadline, you’re hit with a 5% penalty right away, plus an additional 0.417% interest every month the tax goes unpaid. That interest keeps stacking until it caps out at 25%.

And if you can’t provide exemption certificates during an audit? Even if your customer was supposed to be tax-exempt, you’ll still be held responsible for the full sales tax amount— because, in Michigan’s eyes, no paperwork means no exemption.

In short: keep your filings timely, and your paperwork handy.

E-Commerce Best Practices

So how do you avoid these Michigan sales tax penalties and keep your e-commerce compliance game tight?

• Double-check marketplace tax collection. Platforms like Amazon or Etsy are usually reliable, but glitches happen. Make sure tax is actually being collected on your sales.

• Track your Michigan sales and transaction counts monthly. This helps you stay on top of nexus thresholds and makes filing smoother.

• Don’t skip “zero returns.” Even if you didn’t make any sales in a given period, Michigan still expects you to file. Skipping it could trigger red flags with the Treasury.

Small missteps can become big problems. But the good news? With the right systems and a little attention to detail, staying compliant is totally manageable.

Avoid fines with doola’s compliance tools. Sign up here.

How doola Helps E-Commerce Sellers With Michigan Sales Tax

If reading through all these Michigan sales tax rules made your head spin a little, don’t worry. We’re here to help.

From helping you register for your seller’s permit and keeping track of filing deadlines, to sorting out exemptions and nexus triggers. We’ll sort out everything for you.

👉 Let’s make sales tax less scary— book a demo with doola