1. The rate is 6%, whoever you buy from
Michigan taxes a vehicle purchase at 6%. From a dealer it's called sales tax; from a private seller it's called use tax. Same rate, same money; what changes is who collects it and when. The rate is set by statute, so it's the one line of the deal you can work out before anyone hands you a pen.
It's the biggest of the three things that ride along with the price: tax, a title fee, and registration. Michigan has no safety inspection and no emissions test for passenger cars, so nothing else stands between the handshake and the Secretary of State counter.
2. From a dealer: they collect it
A licensed Michigan dealer collects the tax at the sale and sends it to the state, and nearly every dealer files your title and registration for you too. The tax is charged on the full purchase price, and the dealer's documentary fee counts as part of that price, so it gets taxed as well.
So the cleanest way to see what you're paying is to ask for the breakdown before you sign, not after: price, doc fee, tax, title, plate, each on its own line.
3. The trade-in credit, and why it only exists at a dealer
When a dealer takes your old car in trade on the same deal, Michigan taxes the difference, not the full price: the agreed trade-in value comes off the taxable amount, up to a cap set by statute that rises every year. The credit is worth 6% of whatever trade value it covers, which narrows the gap between a trade offer and a private-sale price — the honest math is in Trade it in, or sell it yourself?.
It belongs to dealer sales only: a private seller who takes your old car as part payment doesn't earn it, and the tax runs on the full value. Ask the dealer to show the credit as its own line.
4. From a private seller: you pay it at the SOS
When you buy from a person, nobody collects tax at the kitchen table. You pay it at a Secretary of State office when you transfer the title and register the car, along with the title fee and your plate. Bring the signed-over title with the odometer reading filled in, your ID, and proof of Michigan no-fault insurance — the SOS won't register a car without it.
You have a short window after the sale to do this, with a late fee past it; the SOS site says how long. The seller keeps their plate, so you'll transfer one of your own or buy new. If the two of you can go to the office together, do.
5. What the state thinks the car is worth
Here's the part most people don't know: on a private sale, the tax is charged on the purchase price or the car's retail value, whichever is greater. Treasury checks the price you report against a published pricing guide, and if your number sits well below it, a letter can follow asking for tax on the difference. A gift between people who aren't close relatives is taxed on the guide value, not on zero.
If you genuinely got a deal because the car needed work, keep the evidence: a bill of sale that states the price and describes the condition, repair estimates, or a written appraisal from a shop — those are what Treasury will consider. Writing down a number that isn't the real one doesn't save anything and can bring penalties; paying on the real price and keeping your paperwork costs nothing extra.
Transfers between close family — spouse, parent, child, sibling, grandparent, and most in-laws — are exempt. The SOS lists exactly who qualifies; cousins, aunts and uncles aren't on it.
6. Bought it in another state? Michigan still wants its 6%
If you find the right car in Ohio or Indiana and bring it home, you'll title it in Michigan and pay Michigan's use tax when you do. Whether the other state collects anything at the sale depends on that state; if it did, Michigan generally credits what you paid, up to its own 6%, as long as that state returns the favor for Michigan buyers — most do, not all.
Bring the bill of sale and proof of any tax paid, and the counter works out what's still owed. The retail-value check above applies here too, since an out-of-state dealer isn't a Michigan-licensed one. What you don't need is an inspection first; Michigan doesn't require one.
7. Ask for the out-the-door number
Whoever is selling, ask one question before you agree to anything: "What's the out-the-door price?" — the number with tax, title, registration and every fee inside it. A dealer can put it in writing — a text is fine — and it should reconcile line by line: price, doc fee, 6% on the taxable amount after any trade-in credit, title, plate.
A private seller can't quote the tax, but you can: 6% of the price (or of the guide value, if that's higher), plus the title fee and whatever your plate costs — the SOS site has a calculator for that part. Do that math before you fall for a listing on the board; the windshield number is where the cost starts, and the out-the-door number is what you actually pay.