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SB 981

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 Kevin Hertel

Adds a new portable electronic device credit to sales tax calculations when a trade-in is used, separately stated on the invoice.

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION
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Bill Summary · SB 981

Overview

Senate Bill 981 (2025-2026) from Michigan would amend section 1 of the General Sales Tax Act (1933 PA 167, as amended) to address the treatment of trade-ins, credits, and related charges in the calculation of sales tax. The bill was introduced on May 19, 2026, by Senator Hertel and referred to the Senate Committee on Finance, Insurance, and Consumer Protection.

Main purpose and intent

  • Clarify how various credits, including trade-in credits, are treated in the calculation of gross proceeds and sales price for sales tax purposes.
  • Specifically add a provision related to the credit for the agreed-upon value of a portable electronic device used as part payment of the purchase price of a new or used portable electronic device, when the seller is in the business of selling portable electronic devices at retail and the value is separately stated on the invoice or related document.

Key provisions and changes

  • Definition updates and existing framework:
    • Retains existing definitions for “person,” “sale at retail,” “gross proceeds,” and “sales price,” and lists various inclusions and exclusions that determine the measure of tax.
  • Trade-in and credits (subsection (d)):
    • The bill enumerates the components of the “sales price” and how trade-ins and third-party price reductions are treated.
    • Subparagraph (vi) currently provides a credit for any trade-in, with certain exceptions, as part of computing the sales price.
    • Subparagraph (xvi) adds a new credit specific to portable electronic devices: a credit for the agreed-upon value of a portable electronic device used as part payment of the purchase price of a new or used portable electronic device, provided the value of the credit is separately stated on the invoice or similar document.
    • The new portable electronic device credit applies to sellers engaged in the retail sale of portable electronic devices and requires separate statement of the credit value on the purchase documentation.
  • Other provisions:
    • The bill reiterates the broad scope of “person” and definitions that affect who is subject to the tax.
    • Maintains references to agency rules and procedures for administration, including potential treatment of unlicensed sellers as agents of licensed dealers for purposes of the tax.
    • There are transitional provisions related to delivery and installation charges (and preexisting adjustments dating back to 2023), ensuring certain historical balances and assessments are resolved or not pursued in specific cases.

Who and what would be affected

  • Retailers that sell portable electronic devices (e.g., smartphones, tablets, laptops, etc.) and offer a trade-in or value credit as part of a sale.
  • Consumers purchasing portable electronic devices who may receive a credit for a trade-in or a separate portable electronic device credit.
  • Tax administration (Department of Treasury) responsible for administering the tax, calculating gross proceeds, and applying the new credit rules.

Procedural/timeline aspects

  • Status: Introduced May 19, 2026; referred to the Committee on Finance, Insurance, and Consumer Protection.
  • The bill would take effect per the normal legislative process; however, the text provided does not specify an effective date beyond general passage, so readers should watch for accompanying fiscal notes or implementation dates in committee reports or the enacted version.

Potential impact

  • Could simplify or standardize the treatment of portable electronic device credits in sales tax calculations.
  • May affect pricing behavior for retailers using trade-in programs and third-party discount mechanisms.
  • Consumers may notice changes in final tax calculation when trade-ins or device credits are part of a transaction.

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

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