AutoTaxCalculatorAuto sales tax in Michigan: 6% of the full price
Michigan vehicle sales tax = 6% × (price − dealer discounts − trade-in credit up to $12,000). A $38,000 car with a $500 dealer discount and a $14,000 trade-in owes $1,530.
The General Sales Tax Act (MCL 205.52) is the authority for the tax. The Secretary of State's dealer manual puts it plainly: when sales tax is due, it's 6% of the full purchase price. "Full" means everything you pay the dealer. Money, credit, services, a trade or anything else of value all count as payment. A lease early-termination penalty rolled into the price is taxed too.
The manual gives one rate for every Michigan customer, with no county or city rate to look up, so a Detroit buyer and a Marquette buyer pay the same 6%. Dealers collect the tax at the sale and send it to the Secretary of State with the title application (form RD-108).
Michigan's trade-in cap for 2026
Michigan's trade-in credit has a dollar limit that Treasury publishes for each calendar year. For 2026, Form 485 sets it at:
- Motor vehicles: the agreed trade-in value or $12,000, whichever is less
- Recreational vehicles: no dollar limit when an RV is traded toward another RV
The credit only applies to a vehicle traded in toward a new or used vehicle bought from a licensed dealer. If you sell your old car yourself and buy privately, there's no credit. With the full $12,000 credit you save $720 in tax. On a trade worth $20,000, the extra $8,000 above the cap gets no credit, so you still pay tax on it.
Rebates vs. dealer discounts
Michigan treats these two kinds of price cuts differently:
| Type | Taxed? | Why |
|---|---|---|
| Manufacturer rebate | Yes | It isn't a discount from the seller, so tax is figured before it comes off. That holds even when it's credited at signing. |
| Dealer rebate or discount | No | The seller is lowering its price, so the discount comes off before tax. |
On a $30,000 car with a $2,000 factory rebate, you pay $1,800 in tax, not $1,680. Ask the dealer which kind of incentive you're getting. If they call it a "rebate" but it's their own discount, it should be noted in the RD-108 remarks.
Taxes and fees for buying a car in Michigan
| Item | Amount |
|---|---|
| Sales tax | 6% |
| Title transfer fee | $15 |
| Lien recorded on the title | +$1 |
| Expedited or instant title | +$5 |
| Plate transfer | $10 to $15 |
| Late title transfer (after 15 days) | $15 |
| Recreation Passport, optional | $15 (1 yr) / $29 (2 yrs) |
A new plate costs whatever your registration fee is. For a 1984 or newer car, the fee is a percentage of the MSRP when it was first titled, then it drops over the next three years. The Secretary of State's fee calculator gives the exact amount from your VIN.
Worked examples
$38,000 SUV at a dealer, $500 dealer discount, $14,000 trade-in, financed, plate transfer
- Trade-in credit: the lesser of $14,000 or $12,000 = $12,000
- Taxable price: $38,000 − $500 − $12,000 = $25,500
- Sales tax: $25,500 × 6% = $1,530.00
- Title $15 + lien $1 + plate transfer $10
- Total: $1,556.00
$12,000 used car from a private seller
- No trade-in credit on a private sale: tax on $12,000
- Sales tax: $12,000 × 6% = $720.00
- Title transfer: $15
- Total before plate: $735.00. Wait past 15 days and it's $750.
Buying in Michigan, registering elsewhere
If you live in another state and take delivery in Michigan, Michigan sales tax is generally due unless the dealer issues a 60-day in-transit permit. What happens next depends on your home state, per Form 485:
- Exempt states (Alaska, Delaware, Montana, New Hampshire, New Mexico, Oregon): no Michigan tax with the in-transit permit.
- Non-reciprocal states (Arkansas, DC, Georgia, Maryland, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, West Virginia): no Michigan tax with the permit, because your state charges its own use tax regardless.
- Reciprocal states: the dealer calculates your home state's tax and Michigan's 6%, each with that state's trade-in rules, and collects the lower amount. Your home state then credits what you paid.
For example, a California buyer with a $5,000 trade-in on a $10,000 car: California allows no trade-in credit, so its tax is $725. Michigan's is 6% of $5,000, or $300. The dealer collects $300. If a third-party carrier delivers the car out of state, no Michigan tax is due.
Who doesn't pay
- Qualifying 501(c)(3), (c)(4) and (c)(19) nonprofits, when the vehicle is titled to the organization and used for its stated purpose
- Federal credit unions, when the name ends in "Federal Credit Union"
- Churches buying a van or bus seating 10 or more to transport people for church functions
- Foreign diplomats with a State Department tax exemption card
- Farm trucks used only on the farm, titled but not plated until tax is paid
Ministers, military members who are Michigan residents, and family members buying from a relative's dealership all pay the tax.
Frequently asked questions
Is a separately purchased extended warranty taxed?
Not if it's an optional add-on with its own charge. A service contract or warranty that's required as part of buying the vehicle is taxable.
How is a leased car taxed in Michigan?
A leasing company registered with Treasury can pay 6% use tax on the monthly lease payments instead of sales tax at titling. Your down payment counts as the first payment, and the lessor remits the use tax on it.
How does the dealer round the tax?
The full price times 0.06, rounded to the third decimal, then rounded up to the next cent if the third decimal is 5 or more, and down if it's less.
Sources
- Michigan Treasury Form 485 (Rev. 1-26): 2026 sales tax and trade-in allowances
- Michigan SOS Dealer Manual, Chapter 8: Sales Tax
- Michigan SOS Dealer Manual, Chapter 7: RD-108 title and registration
- Michigan SOS: Title transfer and vehicle registration
This calculator gives an estimate. The Michigan Secretary of State calculates the final amount. How we calculate