Sales tax: exemptions; offset of the trade in value of personal electronics; provide for. Amends sec. 1 of 1933 PA 167 (MCL 205.51).

2025-2026 Regular Session Introduced by Greg Alexander and 15 co-sponsors

HB 4376 excludes the trade-in credit for portable electronic devices from the sales price, lowering sales tax on device purchases, only if HB 4375 also passes.

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION

#salestax:exemptions

Summary — HB 4376 (General Sales Tax Act amendment)

Title: Sales tax: exemptions; offset of the trade‑in value of personal electronics; provide for.
Bill: HB 4376 (amends MCL 205.51)
Introduced: April 22, 2025 (Rep. Will Snyder)
Current status: Passed House (Oct. 21, 2025; immediate effect); transmitted to Senate and referred to Committee on Finance, Insurance, and Consumer Protection (Oct. 23, 2025). Tie‑barred with HB 4375 (Use Tax Act amendment) — neither bill takes effect unless both are enacted.

Purpose / Intent

HB 4376 excludes from the sales price subject to Michigan sales tax the trade‑in credit a purchaser receives when trading a portable electronic device as part payment toward a new or used portable electronic device. The change is intended to treat electronic trade‑ins similarly to existing trade‑in exclusions for motor vehicles and watercraft, to lower the tax burden on device replacement and encourage recycling of old devices.

Key provisions

Amends section 1 of the General Sales Tax Act (MCL 205.51) to add a specific exclusion to the definition of "sales price."

Allows the agreed‑upon value (trade‑in credit) of a portable electronic device used as part payment to be excluded from the taxable sales price, provided:

The purchase is of a new or used portable electronic device from a seller engaged in retail sale of portable electronic devices, and
The trade‑in credit’s value is separately stated on the invoice, bill of sale, or similar document given to the purchaser.

Defines "portable electronic device" broadly as an electronic device that is portable and includes accessories related to that device.

Tie‑bar: HB 4376 is linked to HB 4375 (which would make a parallel amendment to the Use Tax Act); both must be enacted to take effect.

Who is affected

Consumers who trade in portable electronic devices (phones, tablets, wearables, etc.) when buying another portable device from a retail seller.

Retail sellers of portable electronic devices (must separately state trade‑in credit and maintain documentation).

State and local budgets (see fiscal impact).

Fiscal impact

Estimated reduction in sales and use tax revenue: about $7.0 million to $9.0 million annually (industry estimate scaled to Michigan). Actual impact could vary depending on final definition scope.

Revenue allocation implications:

Approximately 73% of sales tax revenue is constitutionally earmarked to the School Aid Fund, 10% to revenue sharing, remainder to the General Fund.
For use tax, roughly 57% to the General Fund and 43% to the School Aid Fund (after certain adjustments).

Support and opposition

Support: Asurion (testified), AT&T, T‑Mobile (submitted positions). Supporters cite parity with vehicle trade‑ins, consumer affordability, and environmental benefits (recycling).

Opposition: Michigan Department of Treasury and multiple education associations (concern about reduced School Aid Fund revenue).

Practical effect / next steps

If enacted (along with HB 4375), taxable sales prices for device purchases that use trade‑in credit would be reduced by the separately stated trade‑in value, lowering the sales or use tax owed at the point of sale. The bill awaits further consideration in the Senate committee assigned to finance, insurance, and consumer protection.