Car Sales Tax in Michigan
The state sales tax for car purchases in Michigan is 6%. Learn more about car sales tax rates in Michigan here.
Written by Rob Shapiro
Reviewed by Jessica Barrett
On any car purchase in Michigan, you will need to pay a 6% sales tax. If this seems high, the good news is there is no other sales tax applied to car purchases at the county, city, or any other level.
No matter the sticker price of a car, it’s important to remember taxes and fees will apply. More specifically, you need to be prepared to pay sales tax, which is unavoidable and can be pricey. Other fees will likely include title and registration fees paid to the state, as well as documentation fees paid to the dealership.
If you’re buying a car in Michigan, you need to consider sales tax and how it will affect your purchase.
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!How much is the car sales tax rate in Michigan?
The state car sales tax rate in Michigan is 6%, but luckily, it stops there—no other county or city taxes will be added to the purchase price.
Do not forget to factor this into your budget when deciding how much you have to spend on your new car.
How are car trade-ins taxed in Michigan?
When buying a car from a dealership, you will often have a
trade-in option
. This is where you give the dealership your current car in exchange for a credit toward your new car. In Michigan, your trade-in value is subtracted from the purchase price of the vehicle you’re leasing or buying before the sales tax is added. 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 $2,000 credit. You will only have to pay 6% sales tax on $28,000. This makes the trade-in option even more valuable and rewarding!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.
How to calculate sales tax on a car in Michigan
You don’t need crazy math skills to calculate the sales tax on a vehicle in Michigan. It’s a straightforward 6% added to the purchase price of any vehicle. Just take the sticker price minus your trade-in and multiply that by 1.06.
The other fees you may be subjected to vary by dealership and financing method.
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Exemptions from Michigan car sales tax
The one exemption to car sales tax in Michigan is if you’re buying a vehicle from an immediate family member, like your parents. In those instances, you are not required to pay car sales tax.
MORE:
How to estimate Michigan tax, title, and registration fees
When you buy your new car, you will be responsible for paying title and registration fees, plate transfer fees, and documentation fees in addition to the purchase price plus sales tax.
Review the information in this table that covers additional costs associated with car purchases in Michigan:
Cost | Average cost |
|---|---|
Sales tax | 6% |
Registration fee | $15 |
Title fee | $15 |
Plate transfer | $10 |
Documentation fee | $165 on average with a $190 limit |
You want to have a complete and comprehensive budget when shopping for a new car. Make sure to include sales tax and these additional fees so you can shop with confidence.
MORE: Is car insurance tax deductible?
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FAQ
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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