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How Much are Used Car Sales Taxes in Michigan?

How Much are Used Car Sales Taxes in Michigan?

Buying a used car in Michigan is a great way to save some money, but there’s one thing you can’t ignore: the sales tax. The statewide rate for used car sales tax in the state of Michigan is 6% of the vehicle’s purchase price.

Quick links:

How much tax will I pay?

How does MI calculate tax?

How do I pay the MI car sales tax?

Can I avoid paying tax in MI?

Is it better to go to a dealer?

The state of Michigan is one of those that imposes no local taxes—no additional city or county taxes to weigh heavy on your wallet. While you’re off the hook for paying local taxes, you still have to factor in registration fees and title transfers in Michigan state.

Keep reading to get the scoop on Michigan's vehicle sales taxes.

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Do You Pay Taxes When You Buy a Car From a Private Seller in Michigan?

When buying a car in Michigan, you’ll pay 6% of the vehicle’s purchase price, whether you buy from private parties or car dealers. The tax law does not discriminate between the two.

In addition to the state sales tax, other fees are involved with purchasing a car, such as registration fees and vehicle title fees. You pay $15 for title transfer fees and an additional $15 if you fail to complete the transfer within 15 days of the sale. Standard Michigan license plate fees are $5.

Here’s what you need to know about registering the car.

Vehicle Registration in Michigan

When you purchase a license plate for your vehicle, you will also be charged for the vehicle's registration fees. They are calculated based on:

  • The Manufacturer suggested retail price (MSRP) of the vehicle, based on the year it was made
  • License plate fees
  • Processing fees
  • Recreation Passport or personalized license plate (both optional)

Michigan has a graded vehicle registration rate system dependent on the value, age, and weight of the vehicle. For example, the registration charge for a $10,000 vehicle is $165, whereas the registration fee for a $20,000 vehicle is $195.

For the following three years, the fee is decreased by a percentage of the original registration amount. If the vehicle was made in 1983 or before that year, the registration fee depends on its weight. You can use the government’s official online registration fee calculator to help you figure out what you might owe.

Every year, you must renew your registration and license plates in Michigan. You can do that online, via mail, or at a self-service station, where you can get registration renewal and print your tabs instantly. You won’t be able to get a renewal without documentation of a valid Michigan No-Fault insurance policy.

Read more about Michigan’s registration fees right here.

How is Used Car Sales Tax Calculated in Michigan?

In Michigan, sales tax is calculated based on the vehicle's purchase price. There are people who think they can outsmart the government by negotiating a low "official" purchase price and paying the rest in a side transaction. But the Michigan Department of Motor Vehicles (DMV) can’t be fooled so easily.

Closeup tax on calculator. Concept of tax return, taxation, tax refund, tax preparation.

If the DMV suspects that the purchase price of the vehicle was artificially decreased, they will calculate sales tax based on the car’s fair market value. The DMV establishes what the car is worth on the open market by referring to Kelley Blue Book or other reliable sources on used car prices. If the DMV concludes that the car's fair market value is greater than the selling price, the sales tax can be assessed based on the fair market value.

How to Pay Michigan Vehicle Sales Tax

Here's how to pay car sales tax in Michigan after buying a used car from a private seller:

  1. You and the seller must complete the necessary paperwork to transfer ownership of the vehicle, including the vehicle bill of sale (when you buy a car on PrivateAuto, we provide an official Michigan bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process). To transfer vehicle ownership in a private transaction, you’ll need the following documents:
  2. The original car title with an odometer reading and the seller’s signature
  3. Proof of Michigan No-Fault insurance
  4. The buyer and the seller’s valid driver’s licenses or IDs

You must complete the title transfer within 15 days of the car's purchase. Michigan officials recommend having the seller come with you to a Secretary of State office, but that’s not required. See our full guide to transferring a Michigan car title for more.

  1. Calculate the amount of sales tax due depending on the state sales tax rate. The Michigan sales tax on cars is 6%. Multiply the vehicle's purchase price by 0.0600. For example, if you paid $10,000 for a car, the sales tax would be $600. Calculating how much your car will cost after taxes can be a nuisance, but our sales tax calculator might come in handy.
  2. Sign the Vehicle Title Application (Form TR-11L) in front of a notary public or a licensing agent.
  3. Submit your Application for Michigan Title and Registration Statement of Vehicle Sale (Form RD-108).
  4. Submit payment for all taxes and fees.
  5. Get payment proof from the Michigan Department of Motor Vehicles.
  6. Get your new registration and title. Once you've paid the sales tax and turned in the necessary paperwork, you'll get your new registration and title for the car. The title and registration will show that you bought the car and that the sales tax has been paid. You will also get new license plates.

If you buy a car in a state that levies no sales tax and register it in that same state, you won’t pay Michigan sales tax if you later register it in Michigan. If you immediately register your new-to-you car in Michigan right after purchasing it in another state, you’ll pay Michigan sales tax.

How to Avoid Paying Sales Tax on a Car in Michigan?

There’s no way around it—property taxes, income taxes, sales taxes, and other taxes are part of life. You are required by law to pay sales taxes on used cars in Michigan or any other state—unless you meet an exemption.

Michigan Car Sales Tax Exemptions

Here are some sales tax exemptions for used vehicle purchases in Michigan:

  • If you’re buying a vehicle from an immediate family member (parent, child, sibling, or spouse), you are not required to pay car sales tax.
  • Certain nonprofit organizations may qualify for tax exemptions when buying a car, provided they meet the following criteria:
  • The organization is a nonprofit school, hospital, church, government agency, or parent cooperative preschool. They submit the Sales and Use Tax Certificate of Exemption form (3372).
  • The vehicle is registered in the name of a nonprofit entity and used solely for the entity’s purposes.
  • Motor vehicles purchased by religious organizations may be tax-exempt. Church buses and vans with seated capacities of 10 or more passengers qualify for sales tax exemptions. All qualifying vehicles must be registered in the name of the religious organization.
  • Foreign diplomats stationed in the United States and their families are exempt from paying sales tax on motor vehicles.
  • Nonresident military personnel receiving an in-transit permit may be exempted from paying sales taxes. They need to submit a letter from their commanding officer that confirms the purchaser's home address and verifies active service in the armed forces at the time of purchase.

Is Buying from a Dealer Better?

Many people think buying from car dealers is a magical solution to avoid all the hassle (and perhaps a fee here and there). In fact, when you go to a dealer, you end up paying more.

  • Dealerships charge a "documentation fee" above and beyond all the other taxes and fees you have to pay. The other taxes and fees are not optional. The documentation fee is: just don’t go to a dealer. The average documentation fee in the state of Michigan is $165, with a state limit of $190.
  • Dealers usually charge higher prices. Their business model is based on buying as low as possible and selling as high as possible to make the spread that keeps them in business. Cut out the middleman and go directly to the private seller to get the best deals.

We do admit that dealers bring a certain amount of convenience that you don’t traditionally get when you buy from a private seller. In fact, that’s why PrivateAuto exists. We give you dealer-like convenience in the palm of your hand while allowing you to transact peer-to-peer with regular folks like yourself.

Avoid documentation fees and get lower prices when you buy used cars from private sellers right here on PrivateAuto.

Buy and Sell Used Cars on PrivateAuto

Conduct private car transactions easily and safely with PrivateAuto. Our innovative platform connects buyers and sellers and gives them all the tools to complete the deal, from in-app financing to secure messaging to integrated payments.

PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.

Whether you want to shop used vehicles for sale or are trying to sell your used car for top dollar, PrivateAuto will help you get the deal done.

Get started with PrivateAuto today.

Here’s how you can sell your car in Michigan with a few simple steps:

  1. Gather necessary documentation

You’ll need your vehicle title and other documentation. Have all the paperwork you need to sell your car privately, so you’re not scrambling to find it at the moment of completing a sale.

2. Register on PrivateAuto and get verified

To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.

3. List your car

Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.

4. Set your terms

It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified according to your preferences.

5. Vet incoming offers

Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.

6. Choose a buyer

When you find an offer you like, accept it and proceed to the next step with that buyer.

7. Schedule a meeting

The buyer will want to look at your car. No more back-and-forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test drives and coordinate a time and place for meetings. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)

8. E-sign documents

After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.

9. Get paid, instantly

Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.

10. Transfer title

When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.

WA Used Car Sales Tax FAQ

Do non-residents pay sales tax in Michigan state?

In most cases, non-residents will not pay sales tax when they buy a car in Michigan, if they’re planning on registering it in another state. When you buy a used car, you pay sales tax on it based on where you register it, not where you purchased it. Check out the following scenarios.

  1. You live in Washington and you buy a car remotely in Michigan because you found a screaming deal. You take the car back to Washington, register it, and pay Washington car sales tax based on your city and county of residence.
  2. You’re a resident of New York State planning to move to Michigan. You buy a used car, register it in New York, and shortly thereafter move to Michigan and update the registration. You will not pay Michigan sales tax because you’ve already paid it in New York.
  3. You’re a resident of Delaware and you buy a used car in Michigan. You take it back to Delaware and register it there. Because Delaware does not have car sales tax, you owe no tax.

Can I register an out-of-state car in Michigan?

You can register an out-of-state car in Michigan if you are a resident of the state or are in the process of moving to Michigan and establishing residency here. Here’s what you need to submit to the Secretary of State's office:

  • The title for the out-of-state car
  • Valid driver's license or state identification
  • Proof of Michigan No-Fault insurance
  • The registration of the out-of-state vehicles (if the vehicle was registered in another state)

How soon do I need to transfer the title and get a license plate?

When you buy a used car in Michigan, you need to transfer the title and get a license plate within 15 days. The Michigan Secretary of State strongly advises that you visit their office as soon as possible after you purchase your vehicle from a private seller.

Close up picture of a standard Michigan license plate.

If you transfer the vehicle title more than 15 days after the purchase, you’ll face an additional $15 late fee.

You can schedule your visit to the Michigan Department of State online.

Do I pay sales tax if I buy a car from my grandfather?

When you purchase a motor vehicle from your grandparents—or they give it to you—you don’t need to pay the state sales tax (6%). You qualify for a sales tax exemption if you buy or inherit the vehicle from your:

  • Spouse
  • Parent or legal guardian
  • Sibling or stepbrother
  • Child or stepchild
  • Grandparent
  • Grandchild
  • In-laws (mother/father-in-law, brother/sister-in-law, son/daughter-in-law)

You do need to cover the cost of license plates, title transfer, and registration fees for the vehicle.

How much will I pay for a personalized plate?

You’ll pay $30 for a personalized license plate in addition to the registration renewal amount. Here are the types of personalized license plates you can obtain in the state of Michigan:

  1. Special cause fundraising plates: For every plate sold ($35), $25 goes to the designated special cause fund (e.g., Breast Cancer Awareness, Children Trust Michigan, Donate life, Wildlife Habitat)
  2. University fundraising plates
  3. Military and veteran plates
  4. Special organization plates (e.g., Amateur Radio Operator, Michigan Professional Fire Fighters Union, Police Officers Association of Michigan)
  5. Disability plates
  6. Industry plates
  7. Digital license plates
  8. Collectors plates
  9. Historical license plates

If you need more information, check out the Michigan State Department website.

What if the seller can't come with me to transfer the title?

If the seller can’t come with you to the Secretary of State's office, that’s fine. Make sure they’ve provided you with the following:

  • An accurately completed and signed title
  • An odometer disclosure statement
  • A lien termination statement or title signed by the lienholder (if there is a lien or loan on the car)

What is a Michigan memo registration?

A Michigan memo registration is issued to residents of the state who have a car registered and plated but not titled in the state of Michigan. A memo registration will be issued if:

  • The owner's out-of-state title is held by a lienholder.
  • A company based in another state operates vehicles in Michigan.
  • Someone from another state whose license has expired must obtain a temporary permission in order to return home.
  • A new resident is unable to locate their out-of-state title and needs a temporary permission until a duplicate title can be acquired (only a 30-day permit can be issued)

To register for and maintain a memo registration in Michigan, you must show proof of valid Michigan No-Fault insurance.

Which state has the cheapest car tax?

Each state in the US has its own taxes and fees for purchasing a car. Some states offer tax exemptions for certain types of motor vehicles.

States such as Oklahoma, North Carolina, Colorado, and Alabama charge less than 3.5% in sales taxes on used cars.

Alaska, Delaware, Montana, New Hampshire, and Oregon don’t charge sales tax when you purchase a motor vehicle. So, if you really want to avoid car sales tax, you might consider moving to one of these states.