Free guide for contractors
Do contractors charge sales tax in Michigan?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
MI Michigan
Usually no tax on the invoiceUsually no. Michigan treats contractors as consumers of materials, who may not charge sales or use tax directly to the customer.
Michigan treats contractors as consumers of the materials they use in constructing, altering, repairing or improving the real estate of others.
A contractor that pays sales or use tax on what it uses may not charge sales or use tax directly to its customer. It may include the tax in the total contract price as an overhead cost.
Property that stays tangible personal property, such as a free-standing appliance, a window air conditioner or window treatments, is a retail sale. A contractor making retail sales must be licensed under the General Sales Tax Act.
It turns on: whether the item becomes part of the real estate or stays movable; whether the contractor consistently operates as a retailer.
Watch out for
- Contractors that consistently hold themselves out to the public as retailers and collect and remit sales tax owe sales tax on the sales price. Treasury's example is an HVAC contractor billing a blower motor plus 6%, with labor itemized and untaxed (RAB 2025-18 § 3(B); IPD 2005-3).
“may not charge sales or use tax directly to its customer.”Michigan RAB 2025-18