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SENATE BILL NO. 897
A bill to amend 1933 PA 167, entitled
"General sales tax act,"
by amending section 4a (MCL 205.54a), as amended by 2021 PA 108.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 4a. (1) Subject to subsection (2), the following are 1
exempt from the tax under this act: 2
(a) A sale of tangible personal property not for resale to a 3
nonprofit school, nonprofit hospital, or nonprofit home for the 4
care and maintenance of children or aged individuals operated by an 5
entity of government, a regularly organized church, religious 6
April 15, 2026, Introduced by Senator HOITENGA and referred to Committee on Appropriations.
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organization, or fraternal organization, a veterans' organization, 1
or a corporation incorporated under the laws of this state, if the 2
income or benefit from the operation does not inure, in whole or in 3
part, to an individual or private shareholder, directly or 4
indirectly, and if the activities of the entity or agency are 5
carried on exclusively for the benefit of the public at large and 6
are not limited to the advantage, interests, and benefits of its 7
members or any restricted group. A sale of tangible personal 8
property to a parent cooperative preschool is exempt from taxation 9
under this act. As used in this subdivision, "parent cooperative 10
preschool" means a nonprofit, nondiscriminatory educational 11
institution, maintained as a community service and administered by 12
parents of children currently enrolled in the preschool, that 13
provides an educational and developmental program for children 14
younger than compulsory school age, that provides an educational 15
program for parents, including active participation with children 16
in preschool activities, that is directed by qualified preschool 17
personnel, and that is licensed under 1973 PA 116, MCL 722.111 to 18
722.128. 19
(b) A sale of tangible personal property not for resale to a 20
regularly organized church or house of religious worship, except 21
the following: 22
(i) Sales in activities that are mainly commercial enterprises. 23
(ii) Sales of vehicles licensed for use on public highways 24
other than a passenger van or bus with a manufacturer's rated 25
seating capacity of 10 or more that is used primarily for the 26
transportation of individuals for religious purposes. 27
(c) The sale of food to bona fide enrolled students by a 28
school or other educational institution not operated for profit. 29
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(d) The sale of a vessel designated for commercial use of 1
registered tonnage of 500 tons or more, if produced upon special 2
order of the purchaser, and bunker and galley fuel, provisions, 3
supplies, maintenance, and repairs for the exclusive use of the 4
vessel engaged in interstate commerce. 5
(e) Except as otherwise provided under subsection (3), a sale 6
of tangible personal property to a person engaged in a business 7
enterprise that uses or consumes the tangible personal property, 8
directly or indirectly, for either the tilling, planting, draining, 9
caring for, maintaining, or harvesting of things of the soil or the 10
breeding, raising, or caring for livestock, poultry, or 11
horticultural products, including the transfers of livestock, 12
poultry, or horticultural products for further growth. 13
(f) Except as otherwise provided under subsection (3), a sale 14
of any of the following to a person engaged in a business 15
enterprise that uses or consumes the following for purposes as 16
described in subdivision (e): 17
(i) Machinery that is capable of simultaneously harvesting 18
grain or other crops and biomass and machinery used for the purpose 19
of harvesting biomass. 20
(ii) Agricultural land tile and subsurface irrigation pipe. 21
(iii) Portable grain bins, including tangible personal property 22
affixed or to be affixed to portable grain bins and directly used 23
in the operation of a portable grain bin. 24
(iv) Grain drying equipment and the fuel or energy source that 25
powers that equipment, including tangible personal property affixed 26
or to be affixed to that equipment and directly used in the 27
operation of grain drying equipment. 28
(v) Tangible personal property purchased and installed as a 29
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component part of a structure such as a barn or shop, including, 1
but not limited to, a water supply system, heating and cooling 2
system, lighting system, milking system, or any other appurtenance 3
used for purposes described in this subdivision or subdivision (e), 4
including the maintenance or improvement of existing structures, to 5
the extent that it is not permanently affixed to and does not 6
become a structural part of real estate. For purposes of this 7
subparagraph and subsection (3), property installed as a component 8
part of a structure as provided in this subparagraph is not 9
permanently affixed to or a structural part of real estate if it is 10
assembled and installed in a manner that it can be disassembled 11
without affecting the physical structural functionality of the 12
original structure and reassembled and reused for any of the 13
purposes described in this subdivision or subdivision (e). 14
(vi) Greenhouses, including tangible personal property affixed 15
to or to be affixed to greenhouses and directly used in the 16
operation of a greenhouse. For purposes of subsection (3), a 17
greenhouse is not permanently affixed to or a structural part of 18
real estate if it is assembled and installed in a manner that it 19
can be disassembled and reassembled without affecting the 20
functionality of the greenhouse upon being reassembled. 21
(g) The sale of agricultural land tile, subsurface irrigation 22
pipe, portable grain bins, greenhouses, and grain drying equipment 23
to a person in the business of constructing, altering, repairing, 24
or improving real estate for others to the extent that it is 25
affixed to and made a structural part of real estate for others and 26
is used for an exempt purpose described under subdivision (e) or 27
(f). 28
(h) The sale of tangible personal property used in the direct 29
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gathering of fish, by net, line, or otherwise, by an owner-operator 1
of a business enterprise, not including a charter fishing business 2
enterprise. 3
(i) The sale of a copyrighted motion picture film or a 4
newspaper or periodical admitted under federal postal laws and 5
regulations effective September 1, 1985 as second-class mail matter 6
or as a controlled circulation publication or qualified to accept 7
legal notices for publication in this state, as defined by law, or 8
any other newspaper or periodical of general circulation, 9
established not less than 2 years, and published not less than once 10
a week. Tangible personal property used or consumed in producing a 11
copyrighted motion picture film, a newspaper published more than 14 12
times per year, or a periodical published more than 14 times per 13
year, and not becoming a component part of that film, newspaper, or 14
periodical is subject to the tax. Tangible personal property used 15
or consumed in producing a newspaper published 14 times or less per 16
year or a periodical published 14 times or less per year and that 17
portion or percentage of tangible personal property used or 18
consumed in producing an advertising supplement that becomes a 19
component part of a newspaper or periodical is exempt from the tax 20
under this subdivision. For purposes of this subdivision, tangible 21
personal property that becomes a component part of a newspaper or 22
periodical and consequently not subject to tax includes an 23
advertising supplement inserted into and circulated with a 24
newspaper or periodical that is otherwise exempt from tax under 25
this subdivision, if the advertising supplement is delivered 26
directly to the newspaper or periodical by a person other than the 27
advertiser, or the advertising supplement is printed by the 28
newspaper or periodical. 29
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(j) A sale of tangible personal property to persons licensed 1
to operate commercial radio or television stations if the property 2
is used in the origination or integration of the various sources of 3
program material for commercial radio or television transmission. 4
This subdivision does not include a vehicle licensed and titled for 5
use on public highways or property used in the transmission to or 6
receiving from an artificial satellite. 7
(k) The sale of a prosthetic device, durable medical 8
equipment, or mobility enhancing equipment. 9
(l) The sale of a vehicle not for resale to a Michigan 10
nonprofit corporation organized exclusively to provide a community 11
with ambulance or fire department services. 12
(m) Before October 1, 2012, a sale of tangible personal 13
property to inmates in a penal or correctional institution 14
purchased with scrip or its equivalent issued and redeemed by the 15
institution. 16
(n) A sale of textbooks sold by a public or nonpublic school 17
to or for the use of students enrolled in any part of a 18
kindergarten through twelfth grade program. 19
(o) A sale of tangible personal property installed as a 20
component part of a water pollution control facility for which a 21
tax exemption certificate is issued under part 37 of the natural 22
resources and environmental protection act, 1994 PA 451, MCL 23
324.3701 to 324.3708, or an air pollution control facility for 24
which a tax exemption certificate is issued under part 59 of the 25
natural resources and environmental protection act, 1994 PA 451, 26
MCL 324.5901 to 324.5908. 27
(p) The sale or lease of the following to an industrial 28
laundry: 29
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(i) Textiles and disposable products including, but not limited 1
to, soap, paper, chemicals, tissues, deodorizers and dispensers, 2
and all related items such as packaging, supplies, hangers, name 3
tags, and identification tags. 4
(ii) Equipment, whether owned or leased, used to repair and 5
dispense textiles including, but not limited to, roll towel 6
cabinets, slings, hardware, lockers, mop handles and frames, and 7
carts. 8
(iii) Machinery, equipment, parts, lubricants, and repair 9
services used to clean, process, and package textiles and related 10
items, whether owned or leased. 11
(iv) Utilities such as electric, gas, water, or oil. 12
(v) Production washroom equipment and mending and packaging 13
supplies and equipment. 14
(vi) Material handling equipment including, but not limited to, 15
conveyors, racks, and elevators and related control equipment. 16
(vii) Wastewater pretreatment equipment and supplies and 17
related maintenance and repair services. 18
(q) A sale of tangible personal property to a person holding a 19
direct payment permit under section 8 of the use tax act, 1937 PA 20
94, MCL 205.98. 21
(r) The sale of a dental prosthesis. 22
(s) A sale of tangible personal property that is specifically 23
designed for, and directly used in, the harvesting of aquatic 24
vegetation from the waters of the state, including parts and 25
materials used for repairs of that tangible personal property, to a 26
person engaged in a business enterprise of harvesting aquatic 27
vegetation and ultimately used for purposes described in 28
subdivision (e) or (f). This exemption does not include a motor 29
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vehicle licensed or required to be licensed for use on the public 1
roads or highways of this state or tangible personal property 2
permanently affixed to and becoming a structural part of real 3
estate. 4
(t) A sale or lease of a school bus or transportation-related 5
services, and parts or adaptive equipment affixed or to be affixed 6
to a school bus that are used in the repair, maintenance, 7
accommodation, or modification of a school bus, if the school bus 8
or services are primarily used in the performance of a contract 9
entered into with an authorized representative of a school for the 10
transportation of preprimary, primary, or secondary school pupils 11
to or from a school or school-related events authorized by the 12
administration of the school. However, if the school bus is used to 13
provide transportation-related services other than to or from a 14
school or school-related event authorized by the administration of 15
the school to a nonexempt entity, then the amount paid for those 16
services by the nonexempt entity is not exempt under this 17
subdivision. As used in this subdivision: 18
(i) "Lease" means any transfer of possession or control for a 19
fixed or indeterminate term for consideration and may include 20
future options to purchase or extend. 21
(ii) "School" means a public school or public school academy as 22
those terms are defined in section 5 of the revised school code, 23
1976 PA 451, MCL 380.5. 24
(iii) "School bus" means that term as defined in section 7 of 25
the pupil transportation act, 1990 PA 187, MCL 257.1807. 26
(u) The sale of feminine hygiene products. As used in this 27
subdivision, "feminine hygiene products" means tampons, panty 28
liners, menstrual cups, sanitary napkins, and other similar 29
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tangible personal property designed for feminine hygiene in 1
connection with the human menstrual cycle. 2
(v) The sale of a portable generator. As used in this 3
subdivision, "portable generator" means a portable engine-driven 4
machine that converts chemical energy from the fuel powering the 5
engine to mechanical energy, which, in turn, is converted to 6
electrical power. 7
(2) The tangible personal property under subsection (1) is 8
exempt only to the extent that that property is used for the exempt 9
purpose if one is stated in subsection (1). The exemption is 10
limited to the percentage of exempt use to total use determined by 11
a reasonable formula or method approved by the department. 12
(3) The exemptions under subsection (1)(e), (f), (g), and (h) 13
do not include transfers of food, fuel, clothing, or any similar 14
tangible personal property for personal living or human consumption 15
or tangible personal property permanently affixed to and becoming a 16
structural part of real estate unless it is agricultural land tile, 17
subsurface irrigation pipe, a portable grain bin, or grain drying 18
equipment. 19
(4) Subsection (1)(e), (f), and (g) as amended by 2018 PA 113 20
is intended to be retroactive and to apply to all periods open 21
under section 27a of 1941 PA 122, MCL 205.27a, but does not apply 22
to any refund claims filed before April 9, 2018. 23
(5) As used in this section: 24
(a) "Agricultural land tile" means fired clay or perforated 25
plastic tubing used as part of a subsurface drainage system for 26
land. 27
(b) "Algae" means any of the group of nonvascular aquatic 28
plants that do not have stems, flowers, leaves, and roots, and that 29
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are single-celled, colonial, or filamentous forms. 1
(c) "Aquatic vegetation" means both algae and higher aquatic 2
plants. 3
(d) "Biomass" means crop residue used to produce energy or 4
agricultural crops grown specifically for the production of energy. 5
(e) "Greenhouse" means a structure covered with transparent or 6
translucent materials for the purpose of admitting natural light 7
and controlling the atmosphere for growing horticultural products. 8
Greenhouse does not include a structure primarily used to grow 9
marihuana. 10
(f) "Higher aquatic plant" means any of the group of 11
vascularized plants that have true stems, flowers, leaves, and 12
roots, that live in water, and that belong to the class 13
Angiospermae. 14
(g) "Portable grain bin" means a structure that is used or is 15
to be used to shelter grain and that is designed to be disassembled 16
without significant damage to its component parts. 17
(h) "Waters of the state" means that term as defined in 18
section 3302 of the natural resources and environmental protection 19
act, 1994 PA 451, MCL 324.3302. 20
Enacting section 1. This amendatory act takes effect 90 days 21
after the date it is enacted into law. 22