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HB 4375

Use tax: exemptions; offset of the trade in value of personal electronics; provide for. Amends sec. 2 of 1937 PA 94 (MCL 205.92). TIE BAR WITH: HB 4376'25

2025-2026 Regular Session Introduced by Greg Alexander and 16 co-sponsors

Excludes separately stated trade-in credits for portable electronic devices from the use tax base, lowering the tax paid by consumers; conditional on HB 4376.

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION
#usetax:exemptions
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Bill Summary · HB 4375

Summary — HB 4375 (Use Tax: electronic trade‑in credit exclusion)

Status: Referred to Committee on Finance, Insurance, and Consumer Protection (passed House Oct. 21, 2025; transmitted to Senate). Filed March 11, 2025; introduced April 22, 2025. Tie‑barred with HB 4376 (sales tax companion). Companion: SB 2511.

Purpose / intent

HB 4375 amends the Use Tax Act (1937 PA 94) to exclude from the taxable purchase price a separately stated trade‑in credit received when a consumer uses a portable electronic device as part payment for a new or used portable electronic device bought at retail. The bill is designed to treat electronics trade‑ins similarly to existing trade‑in treatment for titled vehicles and watercraft, reduce tax on the net price paid by consumers, and (supporters say) encourage recycling of old devices.

Key provisions

  • Amends MCL 205.92 (section 2 — definitions/“purchase price”) to create an exclusion for:
    • The agreed‑upon value (trade‑in credit) of a portable electronic device used as part payment toward the purchase of a new or used portable electronic device from a retailer, when the credit is separately stated on the invoice, bill of sale, or similar document.
  • Defines “portable electronic device” as an electronic device that is portable and includes related accessories.
  • Tie‑bar: HB 4375 cannot take effect unless HB 4376 (which would make the corresponding change in the General Sales Tax Act) is also enacted.

Who is affected

  • Consumers purchasing portable electronic devices at retail — they would pay sales/use tax on the net price after a separately stated trade‑in credit.
  • Retailers of portable electronic devices — changes to invoicing/billing practices to separately state trade‑in credits.
  • State and local budgets — reduced sales and use tax receipts affect distributions to the School Aid Fund, revenue sharing, and the general fund.

Fiscal impact and policy considerations

  • Estimated revenue reduction: $7.0–$9.0 million annually (industry estimate scaled to Michigan). Actual impact could vary with the statutory definition’s scope.
  • Distribution implications: roughly 73% of sales tax revenue is constitutionally earmarked to the School Aid Fund (10% to revenue sharing; remainder to general fund). Use tax receipts are split roughly 57% general fund / 43% School Aid Fund (after certain allocations). Opponents (including the Treasury and several education organizations) cite potential negative effects on School Aid Fund revenue.
  • Supporters (e.g., Asurion, AT&T, T‑Mobile) argue it mirrors auto trade‑ins, lowers costs for consumers, and promotes recycling.

Procedural / timeline notes

  • Passed the House Oct. 21, 2025 (Yeas 71 / Nays 33) with immediate effect; transmitted to the Senate and referred to the Senate Committee on Finance, Insurance, and Consumer Protection. Implementation is conditional on enactment of the companion sales tax bill (HB 4376).

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

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