Is Shipping Taxable in Michigan? Michigan Sales Tax Rules for Delivery and Installation Charges
In Michigan, delivery charges are generally not subject to sales tax when they are separately stated on the invoice. However, if delivery charges are not separately stated or are included in the product price, they may become part of the taxable sales price. This article explains Michigan shipping sales tax rules and compliance considerations for ecommerce sellers.
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Is Shipping Taxable in Michigan?
In Michigan, shipping or delivery charges are generally not taxable when they are separately stated on the invoice. If the delivery charge is not separately stated or is included in the product price, it may become part of the taxable sales price.
For ecommerce sellers, the key compliance point is invoice presentation. The delivery charge should be clearly separated from the product price and from other charges such as installation, handling, or service fees.
Source: Michigan Department of Treasury, Delivery and Installation Charges https://www.michigan.gov/taxes/business-taxes/sales-use-tax/delivery-and-installation-charges
General Rule: Separately Stated Delivery Charges Are Non-Taxable
Michigan generally treats separately stated delivery charges as non-taxable. Sellers should clearly identify the delivery or shipping charge as a separate line item on the invoice, receipt, bill of sale, or checkout summary.
For example:
Product price: USD 100 Delivery charge: USD 8 Total: USD 108
If the USD 8 delivery charge is separately stated, it is generally not subject to Michigan sales tax.
When Can Delivery Charges Become Taxable?
Delivery charges may become taxable when they are not separately stated. If shipping or delivery is included in the product price, there may be no separate delivery charge to exclude.
For example:
Product price, delivery included: USD 108
If the product is taxable, the full USD 108 may be treated as the taxable sales price because the delivery charge is not separately identified.
Delivery Charges vs. Installation Charges
The Michigan Treasury page you provided covers delivery and installation charges. Sellers should avoid combining delivery and installation into one line item because the tax treatment may differ.
A clearer invoice format would be:
Product price: USD 100 Delivery charge: USD 8 Installation charge: USD 20 Total: USD 128
In this example, the delivery charge can be analyzed under the separately stated delivery rule, while the installation charge should be reviewed separately.
By contrast:
Product price: USD 100 Delivery and installation: USD 28 Total: USD 128
A combined charge may create taxability risk because the invoice does not clearly identify which portion is delivery and which portion is installation.
Common Compliance Issues for Ecommerce Sellers
Not separately stating delivery
If delivery is not separately stated on the invoice or checkout summary, the seller may not be able to support non-taxable treatment.
Using free shipping or shipping included pricing
If shipping is included in the product price or advertised as free shipping, there is no separately stated delivery charge to exclude from the taxable sales price.
Combining delivery with installation or other services
Delivery, installation, handling, assembly, and service fees should be separately identified where possible because they may be subject to different tax rules.
Applying one state’s rule across all states
Shipping taxability varies by state. Michigan should be configured separately from states such as Massachusetts, Maryland, Maine, Louisiana, Georgia, and Indiana.
Inconsistent platform and invoice records
If an ecommerce platform treats Michigan shipping as non-taxable, but the invoice does not separately state the delivery charge, the seller’s records may not support the tax treatment.
Practical Tips for Sellers Shipping to Michigan
Sellers shipping taxable goods to Michigan customers should review their invoice format, checkout settings, and tax configuration. If the seller intends to treat delivery as non-taxable, the delivery charge should be separately stated and clearly identified.
Sellers should also avoid bundling delivery with installation, handling, service, or processing fees. They should retain invoices, checkout screenshots, order details, fee breakdowns, marketplace reports, and sales tax filing records.
Conclusion
In Michigan, delivery or shipping charges are generally non-taxable when they are separately stated on the invoice. If delivery charges are not separately stated or are included in the product price, they may become part of the taxable sales price.
For ecommerce sellers, the key takeaway is straightforward: Michigan shipping charges may be treated as non-taxable, but only when the invoice and order records clearly show the charge separately from the product price and other fees.
Source: Michigan Department of Treasury, Delivery and Installation Charges https://www.michigan.gov/taxes/business-taxes/sales-use-tax/delivery-and-installation-charges