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Michigan Department of Treasury

485 (Rev. 09-13)

Instructions for Collecting Vehicle Sales Tax from Buyers Who Will Register

and Title Their Vehicle in Another State

Issued under P.A. 228 of 1984. Filing is voluntary.

Sales tax must be collected on vehicles bought and delivered in Michigan for titling and registration in another state. Below

is a summary of the law pertaining to the collection of that tax.

1. The Michigan sales tax on a retail sale of a vehicle to a person who obtains a special registration (14-day in-transit)

cannot exceed the sales tax that would have been charged by the other state. (See “Special Registration” below.)

2. The sale of a motor vehicle is exempt from Michigan sales tax if the vehicle will be titled and registered in one of the

following exempt or non-reciprocal states.

Exempt States: Alaska, Delaware, Montana, New Hampshire and Oregon. These states have no sales tax. New Mexico

has no sales tax on vehicles.

Non-Reciprocal States: Arkansas, the District of Columbia, Georgia, Maryland, Mississippi, Nebraska, North Carolina,

Oklahoma, South Dakota and West Virginia.

Non-reciprocal states impose a use tax even though the sales tax was paid in another state. To avoid double taxation,

vehicles to be titled and registered in these states are exempt from Michigan sales tax.

To determine the tax due for vehicles to be titled in all other states, refer to the examples provided below and the sales tax

table on page 2.

3. If a special registration (14-day in-transit) is not obtained, Michigan sales tax is due on vehicles purchased and delivered

in Michigan for titling and registration in another state, including exempt states noted in item 2.

Special Registration. Vehicle dealers will use form RD108 when a special registration is obtained. The RD108 must

contain: 1) a statement that the vehicle will be removed from this state for titling and registration in another state (in the

“Remarks” section); and 2) the out-of-state address of the registrant.

Dealers must retain all RD108’s for documentation at audit.

Trade-in Allowance. The Michigan trade-in allowance discontinued February 1, 1985. However, persons purchasing

vehicles in Michigan for titling and registering in another state are allowed to use that state’s trade-in allowance when

computing tax due in Michigan.

Foreign Registration. Persons buying vehicles for titling and registration in another country must pay 6 percent Michigan

sales tax.

Calculating the Michigan Sales Tax

1. Compute the other state’s sales tax, reduced by the trade-in allowance permitted in that state. See the SALES TAX TABLE on

page 2.

2. Compute Michigan sales tax by multiplying the value of the vehicle by 6% (.06).

3. Michigan sales tax due is #1 or #2, whichever is less.

Example A: Vehicle to be titled and registered in Iowa.

Example B: Vehicle to be titled and registered in Illinois.

$10,000.00

(No trade-in presented on purchase)

-3,000.00

(Trade-in allowed in Iowa)

6.25%

(Sales tax rate in Illinois)

$7,000.00

625.00

Illinois sales tax

(Sales tax rate in Iowa)

$ 350.00

Iowa sales tax

$10,000.00

(No trade-in allowed in Michigan)

(Sales tax rate in Michigan)

$10,000.00

(No trade-in allowed in Michigan)

600.00

Michigan sales tax

(Sales tax rate in Michigan)

600.00

Michigan sales tax

In Example A, the Michigan sales tax due is $350.

In Example B, Michigan sales tax due is $600.00.

Form 485 - Instructions For Collecting Vehicle Sales Tax From Buyers Who Will Register And Title Their Vehicle In Another State

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