Michigan Sales Tax Guide for SaaS and E‑Commerce Businesses

2025-07-29

Michigan imposes a 6% statewide sales tax with no local add‑ons. Here's what SaaS and e‑commerce businesses need to know about Michigan sales tax obligations, registration requirements, and compliance.

Quick Reference

Item	Details
State Tax Rate	6%
Local Tax Range	0%
Combined Rate Range	6%
Economic Nexus	$100,000 OR 200 transactions in prior calendar year
Physical Nexus	Any presence in Michigan
SaaS Taxable	No (exempt as service)
Registration Portal	Michigan Treasury Online

Nexus: When Michigan Rules Apply

Economic Nexus

Remote sellers and marketplace facilitators must register for Michigan sales tax if, in the previous calendar year, they had over $100,000 in Michigan gross receipts or at least 200 separate transactions. This threshold includes both taxable and exempt sales. Once you cross the limit, register and begin collecting on the next transaction.

Physical Nexus

You establish physical nexus if you have any presence in Michigan: offices, warehouses, inventory stored in the state, employees, contractors, or trade show appearances.

Registration and Compliance

Sales Tax License

Register for a Michigan Sales Tax License through Michigan Treasury Online (MTO). Have your business entity details, FEIN, and estimated Michigan sales ready.

Filing Frequency & Tax Rates

Michigan charges a flat 6% statewide rate with no local surtaxes.

File monthly if your tax liability is significant
Otherwise you may file quarterly or annually

Returns are due by the 20th day of the month following each reporting period.

Taxability of Goods and Services

Tangible Personal Property

Physical goods shipped into Michigan are taxable at the 6% rate unless specifically exempt, such as groceries or prescription drugs.

Digital Goods and SaaS

Prewritten software downloads and digital products like movies, music, or ebooks are taxable. However, cloud‑hosted software (SaaS, PaaS, IaaS) is generally not taxable because no software is transferred to the customer.

E‑Commerce Businesses: Tangible vs. Digital Products

Tangible Goods

Physical goods shipped to Michigan customers are taxable once you have nexus. Marketplace sales count toward your nexus calculation even if the facilitator collects the tax.

Digital Downloads

Digital products delivered electronically—ebooks, software downloads, digital codes, or media—are taxable as tangible personal property.

Marketplace Facilitators

Marketplace platforms with nexus must collect and remit Michigan tax on facilitated sales. You remain responsible for tracking your total Michigan revenue and filing returns even if the marketplace handles remittance.

Exemptions & Special Cases

Nonprofit organizations and government purchasers may be exempt; keep valid exemption certificates on file
Resale certificates apply when reselling taxable goods or services; maintain proper documentation
Manufacturing equipment and industrial processing may qualify for exemptions
SaaS remains non‑taxable unless bundled with downloadable or physical software

Glossary of Key Terms

Term	Definition
Economic Nexus	Triggered by $100K sales or 200 transactions into Michigan
Physical Nexus	Any physical presence: inventory, employees, or agents
Digital Goods	Electronically delivered items like movies or ebooks, taxable in Michigan
SaaS / PaaS / IaaS	Cloud‑based services not taxable when accessed remotely
Marketplace Facilitator	Platform responsible for collecting and remitting tax on third‑party sales