Always break out installation, support, and training charges from the software license fee to preserve exemptions.
AI responses may include mistakes. For financial advice, consult a professional. Learn more Michigan Sales Tax on Software and Digital Products
Michigan's 6% sales and use tax applies to "tangible personal property," which the state defines to include (canned) computer software. Maintenance agreements follow these specific triggers: Michigan Sales Tax On Software Maintenance
If an optional agreement for prewritten software includes future updates or "tangible deliverables" (like new code versions), it may become subject to tax .
Out-of-state vendors must collect tax if they have a physical presence or meet economic thresholds ($100,000 in annual sales or 200+ transactions in Michigan). Always break out installation, support, and training charges
Maintenance contracts for custom software (designed for a specific user's needs) are generally considered non-taxable services. Critical Factors and Exemptions
If a maintenance agreement is required as part of the purchase of taxable prewritten software and includes future updates or enhancements, the entire cost is generally taxable . Optional Agreements: Learn more Michigan Sales Tax on Software and
When claiming an exemption, ensure Michigan Form 3372 (Sales and Use Tax Certificate of Exemption) is correctly executed.