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SENATE BILL NO. 896
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending section 4 (MCL 205.94), as amended by 2021 PA 109.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 4. (1) The following are exempt from the tax levied under 1
this act, subject to subsection (2): 2
(a) Property sold in this state on which transaction a tax is 3
paid under the general sales tax act, 1933 PA 167, MCL 205.51 to 4
205.78, if the tax was due and paid on the retail sale to a 5
consumer. 6
(b) Property, the storage, use, or other consumption of which 7
April 15, 2026, Introduced by Senator HOITENGA and referred to Committee on Appropriations.
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this state is prohibited from taxing under the Constitution or laws 1
of the United States, or under the constitution of this state. 2
(c) All of the following: 3
(i) Property purchased for resale. Property purchased for 4
resale includes promotional merchandise transferred pursuant to a 5
redemption offer to a person located outside this state or any 6
packaging material, other than promotional merchandise, acquired 7
for use in fulfilling a redemption offer or rebate to a person 8
located outside this state. 9
(ii) Property purchased for lending or leasing to a public or 10
parochial school offering a course in automobile driving except 11
that a vehicle purchased by the school must be certified for 12
driving education and must not be reassigned for personal use by 13
the school's administrative personnel. 14
(iii) Property purchased for demonstration purposes. For a new 15
vehicle dealer selling a new car or truck, exemption for 16
demonstration purposes is determined by the number of new cars and 17
trucks sold during the current calendar year or the immediately 18
preceding calendar year, without regard to specific make or style, 19
according to the following schedule but not to exceed 25 cars and 20
trucks in 1 calendar year for demonstration purposes: 21
(A) 0 to 25, 2 units. 22
(B) 26 to 100, 7 units. 23
(C) 101 to 500, 20 units. 24
(D) 501 or more, 25 units. 25
(iv) Motor vehicles purchased for resale purposes by a new 26
vehicle dealer licensed under section 248(8)(a) of the Michigan 27
vehicle code, 1949 PA 300, MCL 257.248. 28
(d) Property that is brought into this state by a nonresident 29
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person for storage, use, or consumption while temporarily within 1
this state, except if the property is used in this state in a 2
nontransitory business activity for a period exceeding 15 days. 3
(e) Property the sale or use of which was already subjected to 4
a sales tax or use tax equal to, or in excess of, that imposed by 5
this act under the law of any other state or a local governmental 6
unit within a state if the tax was due and paid on the retail sale 7
to the consumer and the state or local governmental unit within a 8
state in which the tax was imposed accords like or complete 9
exemption on property the sale or use of which was subjected to the 10
sales or use tax of this state. If the sale or use of property was 11
already subjected to a tax under the law of any other state or 12
local governmental unit within a state in an amount less than the 13
tax imposed by this act, this act applies, but at a rate measured 14
by the difference between the rate provided in this act and the 15
rate by which the previous tax was computed. 16
(f) Except as otherwise provided under subsection (3), 17
property sold to a person engaged in a business enterprise that 18
uses or consumes the property, directly or indirectly, for either 19
the tilling, planting, draining, caring for, maintaining, or 20
harvesting of things of the soil or the breeding, raising, or 21
caring for livestock, poultry, or horticultural products, including 22
the transfers of livestock, poultry, or horticultural products for 23
further growth. 24
(g) Property or services sold to the United States, an 25
unincorporated agency or instrumentality of the United States, an 26
incorporated agency or instrumentality of the United States wholly 27
owned by the United States or by a corporation wholly owned by the 28
United States, the American Red Cross and its chapters or branches, 29
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this state, a department or institution of this state, or a 1
political subdivision of this state. 2
(h) Property or services sold to a school, hospital, or home 3
for the care and maintenance of children or aged individuals, 4
operated by an entity of government, a regularly organized church, 5
religious organization, or fraternal organization, a veterans' 6
organization, or a corporation incorporated under the laws of this 7
state, if not operated for profit, and if the income or benefit 8
from the operation does not inure, in whole or in part, to an 9
individual or private shareholder, directly or indirectly, and if 10
the activities of the entity or agency are carried on exclusively 11
for the benefit of the public at large and are not limited to the 12
advantage, interests, and benefits of its members or a restricted 13
group. The tax levied does not apply to property or services sold 14
to a parent cooperative preschool. As used in this subdivision, 15
"parent cooperative preschool" means a nonprofit, nondiscriminatory 16
educational institution, maintained as a community service and 17
administered by parents of children currently enrolled in the 18
preschool that provides an educational and developmental program 19
for children younger than compulsory school age, that provides an 20
educational program for parents, including active participation 21
with children in preschool activities, that is directed by 22
qualified preschool personnel, and that is licensed under 1973 PA 23
116, MCL 722.111 to 722.128. 24
(i) Property or services sold to a regularly organized church 25
or house of religious worship except the following: 26
(i) Sales in which the property is used in activities that are 27
mainly commercial enterprises. 28
(ii) Sales of vehicles licensed for use on the public highways 29
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other than a passenger van or bus with a manufacturer's rated 1
seating capacity of 10 or more that is used primarily for the 2
transportation of individuals for religious purposes. 3
(j) A vessel designed for commercial use of registered tonnage 4
of 500 tons or more, if produced upon special order of the 5
purchaser, and bunker and galley fuel, provisions, supplies, 6
maintenance, and repairs for the exclusive use of a vessel of 500 7
tons or more engaged in interstate commerce. 8
(k) Property purchased for use in this state if actual 9
personal possession is obtained outside this state, the purchase 10
price or actual value of which does not exceed $10.00 during 1 11
calendar month. 12
(l) A newspaper or periodical classified under federal postal 13
laws and regulations effective September 1, 1985 as second-class 14
mail matter or as a controlled circulation publication or qualified 15
to accept legal notices for publication in this state, as defined 16
by law, or any other newspaper or periodical of general 17
circulation, established not less than 2 years, and published at 18
least once a week, and a copyrighted motion picture film. Tangible 19
personal property used or consumed in producing a copyrighted 20
motion picture film, a newspaper published more than 14 times per 21
year, or a periodical published more than 14 times per year, and 22
not becoming a component part of that film, newspaper, or 23
periodical is subject to the tax. Tangible personal property used 24
or consumed in producing a newspaper published 14 times or less per 25
year or a periodical published 14 times or less per year and that 26
portion or percentage of tangible personal property used or 27
consumed in producing an advertising supplement that becomes a 28
component part of a newspaper or periodical is exempt from the tax 29
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under this subdivision. For purposes of this subdivision, tangible 1
personal property that becomes a component part of a newspaper or 2
periodical and consequently not subject to tax, includes an 3
advertising supplement inserted into and circulated with a 4
newspaper or periodical that is otherwise exempt from tax under 5
this subdivision, if the advertising supplement is delivered 6
directly to the newspaper or periodical by a person other than the 7
advertiser, or the advertising supplement is printed by the 8
newspaper or periodical. 9
(m) Property purchased by persons licensed to operate a 10
commercial radio or television station if the property is used in 11
the origination or integration of the various sources of program 12
material for commercial radio or television transmission. This 13
subdivision does not include a vehicle licensed and titled for use 14
on public highways or property used in the transmitting to or 15
receiving from an artificial satellite. 16
(n) An individual who is a resident of this state who 17
purchases an automobile in another state while in the military 18
service of the United States and who pays a sales tax in the state 19
where the automobile is purchased. 20
(o) A vehicle for which a special registration is secured in 21
accordance with section 226(9) of the Michigan vehicle code, 1949 22
PA 300, MCL 257.226. 23
(p) The sale of a prosthetic device, durable medical 24
equipment, or mobility enhancing equipment. 25
(q) Water if delivered through water mains, water sold in bulk 26
tanks in quantities of not less than 500 gallons, or the sale of 27
bottled water. 28
(r) A vehicle not for resale used by a nonprofit corporation 29
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organized exclusively to provide a community with ambulance or fire 1
department services. 2
(s) Tangible personal property purchased and installed as a 3
component part of a water pollution control facility for which a 4
tax exemption certificate is issued under part 37 of the natural 5
resources and environmental protection act, 1994 PA 451, MCL 6
324.3701 to 324.3708, or an air pollution control facility for 7
which a tax exemption certificate is issued under part 59 of the 8
natural resources and environmental protection act, 1994 PA 451, 9
MCL 324.5901 to 324.5908. 10
(t) Tangible real or personal property donated by a 11
manufacturer, wholesaler, or retailer to an organization or entity 12
exempt under subdivision (h) or (i) or section 4a(1)(a) or (b) of 13
the general sales tax act, 1933 PA 167, MCL 205.54a. 14
(u) The storage, use, or consumption of an aircraft by a 15
domestic air carrier for use solely in the transport of air cargo, 16
passengers, or a combination of air cargo and passengers, that has 17
a maximum certificated takeoff weight of at least 6,000 pounds. For 18
purposes of this subdivision, the term "domestic air carrier" is 19
limited to a person engaged primarily in the commercial transport 20
for hire of air cargo, passengers, or a combination of air cargo 21
and passengers as a business activity. The state treasurer shall 22
estimate on January 1 each year the revenue lost by this act 2000 23
PA 200 from the school aid fund established in section 11 of 24
article IX of the state constitution of 1963 and deposit that 25
amount into the state school aid fund from the general fund. 26
(v) The storage, use, or consumption of an aircraft by a 27
person who purchases the aircraft for subsequent lease to a 28
domestic air carrier operating under a certificate issued by the 29
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Federal Aviation Administration under 14 CFR part 121, for use 1
solely in the regularly scheduled transport of passengers. 2
(w) Property or services sold to an organization not operated 3
for profit and exempt from federal income tax under section 4
501(c)(3) or (4) of the internal revenue code of 1986, 26 USC 501; 5
or to a health, welfare, educational, cultural arts, charitable, or 6
benevolent organization not operated for profit that has been 7
issued before June 13, 1994 an exemption ruling letter to purchase 8
items exempt from tax signed by the administrator of the sales, 9
use, and withholding taxes division of the department. The 10
department shall reissue an exemption letter after June 13, 1994 to 11
each of those organizations that had an exemption letter that 12
remains in effect unless the organization fails to meet the 13
requirements that originally entitled it to this exemption. The 14
exemption does not apply to sales of tangible personal property and 15
sales of vehicles licensed for use on public highways, that are not 16
used primarily to carry out the purposes of the organization as 17
stated in the bylaws or articles of incorporation of the exempt 18
organization. 19
(x) The use or consumption of services described in section 20
3a(1)(a) or (c) or 3b by means of a prepaid telephone calling card, 21
a prepaid authorization number for telephone use, or a charge for 22
internet access. 23
(y) The purchase, lease, use, or consumption of the following 24
by an industrial laundry: 25
(i) Textiles and disposable products including, but not limited 26
to, soap, paper, chemicals, tissues, deodorizers and dispensers, 27
and all related items such as packaging, supplies, hangers, name 28
tags, and identification tags. 29
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(ii) Equipment, whether owned or leased, used to repair and 1
dispense textiles including, but not limited to, roll towel 2
cabinets, slings, hardware, lockers, mop handles and frames, and 3
carts. 4
(iii) Machinery, equipment, parts, lubricants, and repair 5
services used to clean, process, and package textiles and related 6
items, whether owned or leased. 7
(iv) Utilities such as electric, gas, water, or oil. 8
(v) Production washroom equipment and mending and packaging 9
supplies and equipment. 10
(vi) Material handling equipment including, but not limited to, 11
conveyors, racks, and elevators and related control equipment. 12
(vii) Wastewater pretreatment equipment and supplies and 13
related maintenance and repair services. 14
(z) Property purchased or manufactured by a person engaged in 15
the business of constructing, altering, repairing, or improving 16
real estate for others, to the extent that the property is affixed 17
to and made a structural part of real estate located in another 18
state, regardless of whether sales or use tax was due and paid in 19
the state in which the property is affixed to real estate. 20
(aa) The sale of a dental prosthesis. 21
(bb) Except as otherwise provided under subsection (3), a sale 22
of any of the following to a person engaged in a business 23
enterprise that uses or consumes the following for purposes as 24
described in subdivision (f): 25
(i) Machinery that is capable of simultaneously harvesting 26
grain or other crops and biomass and machinery used for the purpose 27
of harvesting biomass. 28
(ii) Agricultural land tile and subsurface irrigation pipe. 29
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(iii) Portable grain bins, including tangible personal property 1
affixed or to be affixed to portable grain bins and directly used 2
in the operation of a portable grain bin. 3
(iv) Grain drying equipment and the fuel or energy source that 4
powers that equipment, including tangible personal property affixed 5
or to be affixed to that equipment and directly used in the 6
operation of grain drying equipment. 7
(v) Tangible personal property purchased and installed as a 8
component part of a structure such as a barn or shop, including, 9
but not limited to, a water supply system, heating and cooling 10
system, lighting system, milking system, or any other appurtenance 11
used for purposes described in this subdivision or subdivision (f), 12
including the maintenance or improvement of existing structures, to 13
the extent that it is not permanently affixed to and does not 14
become a structural part of real estate. For purposes of this 15
subparagraph and subsection (3), property installed as a component 16
part of a structure as provided in this subparagraph is not 17
permanently affixed to or a structural part of real estate if it is 18
assembled and installed in a manner that it can be disassembled 19
without affecting the physical structural functionality of the 20
original structure and reassembled and reused for any of the 21
purposes described in this subdivision or subdivision (f). 22
(vi) Greenhouses, including tangible personal property affixed 23
to or to be affixed to greenhouses and directly used in the 24
operation of a greenhouse. For purposes of subsection (3), a 25
greenhouse is not permanently affixed to or a structural part of 26
real estate if it is assembled and installed in a manner that it 27
can be disassembled and reassembled without affecting the 28
functionality of the greenhouse upon being reassembled. 29
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(cc) The sale of agricultural land tile, subsurface irrigation 1
pipe, portable grain bins, greenhouses, and grain drying equipment 2
to a person in the business of constructing, altering, repairing, 3
or improving real estate for others to the extent that it is 4
affixed to and made a structural part of real estate for others and 5
is used for an exempt purpose described under subdivision (f) or 6
(bb). 7
(dd) The sale of tangible personal property used in the direct 8
gathering of fish, by net, line, or otherwise, by an owner-operator 9
of a business enterprise, not including a charter fishing business 10
enterprise. 11
(ee) A sale of tangible personal property that is specifically 12
designed for, and directly used in, the harvesting of aquatic 13
vegetation from the waters of the state, including parts and 14
materials used for repairs of that tangible personal property, to a 15
person engaged in a business enterprise of harvesting aquatic 16
vegetation and ultimately used for purposes described in 17
subdivision (f) or (bb). This exemption does not include a motor 18
vehicle licensed or required to be licensed for use on the public 19
roads or highways of this state or tangible personal property 20
permanently affixed to and becoming a structural part of real 21
estate. 22
(ff) The purchase or lease of a school bus or transportation-23
related services, and parts or adaptive equipment affixed or to be 24
affixed to a school bus that are used in the repair, maintenance, 25
accommodation, or modification of a school bus, if the school bus 26
or services are primarily used in the performance of a contract 27
entered into with an authorized representative of a school for the 28
transportation of preprimary, primary, or secondary school pupils 29
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to or from a school or school-related events authorized by the 1
administration of the school. However, if the school bus is used to 2
provide transportation-related services other than to or from a 3
school or school-related event authorized by the administration of 4
the school to a nonexempt entity, then the amount paid for those 5
services by the nonexempt entity is not exempt under this 6
subdivision. As used in this subdivision: 7
(i) "Lease" means any transfer of possession or control for a 8
fixed or indeterminate term for consideration and may include 9
future options to purchase or extend. 10
(ii) "School" means a public school or public school academy as 11
defined in section 5 of the revised school code, 1976 PA 451, MCL 12
380.5. 13
(iii) "School bus" means that term as defined in section 7 of 14
the pupil transportation act, 1990 PA 187, MCL 257.1807. 15
(gg) The sale of feminine hygiene products. As used in this 16
subdivision, "feminine hygiene products" means tampons, panty 17
liners, menstrual cups, sanitary napkins, and other similar 18
tangible personal property designed for feminine hygiene in 19
connection with the human menstrual cycle. 20
(hh) The purchase of a portable generator. As used in this 21
subdivision, "portable generator" means a portable engine-driven 22
machine that converts chemical energy from the fuel powering the 23
engine to mechanical energy, which, in turn, is converted to 24
electrical power. 25
(2) The property or services under subsection (1) are exempt 26
only to the extent that the property or services are used for the 27
exempt purposes if one is stated in subsection (1). The exemption 28
is limited to the percentage of exempt use to total use determined 29
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by a reasonable formula or method approved by the department. 1
(3) The exemptions under subsection (1)(f), (bb), (cc), and 2
(dd) do not include the transfers of food, fuel, clothing, or any 3
similar tangible personal property for personal living or human 4
consumption or tangible personal property permanently affixed to 5
and becoming a structural part of real estate unless it is 6
agricultural land tile, subsurface irrigation pipe, a portable 7
grain bin, or grain drying equipment. 8
(4) Subsection (1)(f), (bb), and (cc) as amended by 2018 PA 9
114 is intended to be retroactive and to apply to all periods open 10
under section 27a of 1941 PA 122, MCL 205.27a, but does not apply 11
to any refund claims filed before April 9, 2018. 12
(5) As used in this section: 13
(a) "Agricultural land tile" means fired clay or perforated 14
plastic tubing used as part of a subsurface drainage system for 15
land. 16
(b) "Algae" means any of the group of nonvascular aquatic 17
plants that do not have stems, flowers, leaves, and roots, and that 18
are single-celled, colonial, or filamentous forms. 19
(c) "Aquatic vegetation" means both algae and higher aquatic 20
plants. 21
(d) "Biomass" means crop residue used to produce energy or 22
agricultural crops grown specifically for the production of energy. 23
(e) "Greenhouse" means a structure covered with transparent or 24
translucent materials for the purpose of admitting natural light 25
and controlling the atmosphere for growing horticultural products. 26
Greenhouse does not include a structure primarily used to grow 27
marihuana. 28
(f) "Higher aquatic plant" means any of the group of 29
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vascularized plants that have true stems, flowers, leaves, and 1
roots, that live in water, and that belong to the class 2
Angiospermae. 3
(g) "Portable grain bin" means a structure that is used or is 4
to be used to shelter grain and that is designed to be disassembled 5
without significant damage to its component parts. 6
(h) "Waters of the state" means that term as defined in 7
section 3302 of the natural resources and environmental protection 8
act, 1994 PA 451, MCL 324.3302. 9
Enacting section 1. This amendatory act takes effect 90 days 10
after the date it is enacted into law. 11