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HB 5274

AN ACT RELATING TO ELECTIONS -- RESIDENCE OF INDIVIDUALS IN GOVERNMENT CUSTODY ACT

2025 Regular Session Introduced by Edith Ajello and 9 co-sponsors

The bill exempts the sale of a motor vehicle for personal use from state sales tax if purchased by a qualified disabled veteran and registered to them, effective Jan 1, 2026.

02/11/2025 Withdrawn at sponsor's request
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Bill Summary · HB 5274

Summary — HB 5274 (2025)

Purpose

HB 5274 creates a state sales tax exemption for the purchase of a motor vehicle by a "qualified disabled veteran." The exemption is intended to eliminate state sales tax on personally used vehicles purchased and registered to eligible disabled veterans, effective January 1, 2026 (subject to the bill’s tie‑bar).

Key provisions

  • Adds Section 4hh to the General Sales Tax Act (1933 PA 167, MCL 205.1 et seq.):
    • Beginning January 1, 2026, the sale of a motor vehicle to a "qualified disabled veteran" is exempt from the tax imposed under the General Sales Tax Act if:
    • The vehicle will be registered to the qualified disabled veteran; and
    • The vehicle is for personal use only.
    • "Qualified disabled veteran" is defined by reference to section 7b of the General Property Tax Act (1893 PA 206, MCL 211.7b).
  • Amends section 25 of the General Sales Tax Act to add subsection (8)(e):
    • Requires the Department to determine the revenue lost to the State School Aid Fund as a result of the new exemption and deposit an amount equal to that lost revenue into the State School Aid Fund. (Section 25 contains rules on how sales tax collections are distributed among funds and local units.)
  • Enacting (tie‑bar) provision:
    • The amendatory act does not take effect unless Senate Bill No. ____ (companion SB 2128) or House Bill No. 5257 (request no. H03497'25) of the 103rd Legislature is enacted into law.

Who is affected

  • Eligible individuals: persons who meet the statutory definition of "qualified disabled veteran" under MCL 211.7b.
  • Transactions: purchases of motor vehicles that will be registered to the qualified disabled veteran and used personally (not for business use).
  • Fiscal actors: State School Aid Fund, state general fund, and other funds whose distributions depend on sales tax collections may be affected by changes in tax collections and the statutory reimbursement requirement.

Fiscal and administrative impact

  • Direct reduction in state sales tax collections from qualifying vehicle sales.
  • Section 25(8)(e) requires an amount equal to revenue lost to the State School Aid Fund from this exemption be deposited into that fund, effectively preserving school aid receipts but shifting the net fiscal effect to other state accounts (or requiring offsetting appropriations).
  • The Department of Treasury will need to calculate annual lost revenue attributable to the exemption to satisfy the deposit requirement.

Timeline and procedural status

  • Filed: March 14, 2025.
  • Committee activity: public hearings (April–May 2025); reported favorably without amendment (May 12, 2025).
  • Reproduced electronically: November 12, 2025.
  • Referred to Committee on Government Operations: November 12, 2025.
  • Companion bill: SB 2128.

Notes

  • Effective date in the text: January 1, 2026 — but the act is conditioned on enactment of the identified companion bill(s) (tie‑bar).
  • The bill relies on the statutory definition of "qualified disabled veteran" in MCL 211.7b; readers should consult that provision for eligibility criteria.

Compiled from official sources — confirm details with the bill’s official record.

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