Michigan Sales Tax On Software Maintenance May 2026

When a transaction includes both taxable software and exempt services, Michigan uses this test to determine if the primary "object" of the sale is a service or a product. If the software is merely incidental to a professional service, the whole transaction may be exempt. Compliance Tips To protect against audit risks, businesses should:

Out-of-state vendors must collect tax if they have a physical presence or meet economic thresholds ($100,000 in annual sales or 200+ transactions in Michigan). Michigan Sales Tax On Software Maintenance

Agreements that strictly provide services like troubleshooting, technical assistance, or helpdesk access are generally exempt from tax. When a transaction includes both taxable software and

Maintenance contracts for custom software (designed for a specific user's needs) are generally considered non-taxable services. Critical Factors and Exemptions Are you currently reviewing a or trying to

When claiming an exemption, ensure Michigan Form 3372 (Sales and Use Tax Certificate of Exemption) is correctly executed.

Are you currently reviewing a or trying to determine if a specific SaaS product with a desktop agent is taxable?

If an optional agreement for prewritten software includes future updates or "tangible deliverables" (like new code versions), it may become subject to tax .