Use tax: collections; collection of use tax on utility bills; prohibit. Amends sec. 4n of 1937 PA 94 (MCL 205.94n).

2025-2026 Regular Session Introduced by Kevin Daley and 5 co-sponsors

SB 987 would prohibit collecting use tax on monthly utility bills in Michigan, removing use tax from electric, gas, and water charges.

SENATE CO-SPONSOR(S) NAMED: LANA THEIS

#publicutilities:other #usetax:collections

Summary of SB 987 (2025-2026) – Michigan

Purpose and intent

SB 987 proposes to change how the state handles the use tax, specifically addressing the collection of use tax on utility bills. The bill would amend section 4n of 1937 PA 94 (MCL 205.94n) and appears designed to prohibit the collection of use tax on utility bills. In other words, if enacted, utility providers would not be required to collect use tax from customers on their utility bills.

Key provisions and changes

Amends: Section 4n of 1937 PA 94 (MCL 205.94n).

Main change: Prohibits the collection of use tax on utility bills. The bill would rollout a prohibition on utility providers (or the mechanism through which use tax is collected on utilities) from imposing or collecting use tax via monthly utility charges.

Scope: The provision targets the method by which use tax is collected from consumers in the utility bill context. It does not necessarily repeal the broader use tax framework but restricts a specific collection channel (utility bills).

Who or what would be affected

Consumers: Individuals and households that pay utility bills (electric, gas, water, etc.) would be shielded from use tax collection embedded in those bills.

Utility providers: Companies that issue utility bills and previously collected use tax at the point of sale or service might need to adjust billing practices to ensure no use tax is collected on utilities.

State tax administration: Michigan Department of Treasury and related tax administration processes would see changes in how use tax collection is implemented for utility charges.

Procedural and timeline aspects

Status: Introduced and referred to the Committee on Government Operations on May 20, 2026.

Sponsorship: Primary sponsor is Senator Jonathan Lindsey, with several co-sponsors (John Damoose, Dan Lauwers, Roger Victory, Kevin Daley).

Next steps: If advanced by the committee and subsequently approved by the Senate and House, it would proceed to the governor for signature or veto. The bill’s effective date would be specified in the enacted text (not provided in the summary), potentially including a specific effective date or a phase-in period for utilities and tax administrators.

Potential impacts and considerations

Revenue implications: Prohibiting use tax collection on utility bills could reduce state use tax revenue unless offset by other tax adjustments or enforcement elsewhere.

Administrative burden: Utilities and tax authorities would need to align billing systems to ensure compliance with the prohibition, avoiding inadvertent collection of use tax on utility charges.

Consumer protection: The change is consumer-facing, simplifying billing by removing a tax component from utility charges.

Note: The summary reflects the information available from the bill’s description and action history. The full impact will depend on the exact statutory language, any definitions, transitional rules, and the bill’s effective date as enacted.