Michigan Sales Tax Exemption for the Trade-In Value for Motor and Recreational Vehicles

Effective Dec. 15, 2013, the State of Michigan will provide consumers with a sales tax credit for the agreed-upon value of a motor vehicle or recreational vehicle used as a trade-in towards the purchase of a new or used motor or recreational vehicle.

The trade in value is limited to the lesser of the agreed-upon value of the motor vehicle or recreational vehicle traded or $2,000. The agreed-upon value must be explicitly stated on the invoice, bill of sale, or similar document given to the purchaser.

The sales tax exemption effective Dec. 15 will increase $500 per year beginning Jan. 1, 2015, until the amount reaches $14,000 in 24 years. Beginning in 2039, there will be no limitation on the trade-in value. The purchased vehicles do not have to be new.

Please determine the immediate impact on your business by assessing the following considerations:

  • Reprogramming of your vehicle sales software to properly account for the allowable trade-in value credit.
  • Communication of the trade-in value credit changes to your sales and finance departments as well as your administrative staff.

For further information regarding the impact of this change, please contact your Rehmann Advisor.

Published in Dealerships

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