Gov. Rick Snyder Signs Bills to Bring Tax Relief for Families

LANSING, Mich. — Gov. Rick Snyder Wednesday signed into law bills that reduce taxes for people who trade in a vehicle when purchasing a new or used vehicle, boosting Michigan’s economy while maintaining the state’s fiscal responsibility.

Michigan was one of just six states that charges sales tax on the full price of a vehicle when buyers trade in their current models. The new law takes effect on December 15 and individuals can save up to $120 in the first year. When the tax cut is fully phased in, taxpayers will save an estimated $300 million a year.

“This plan is good for Michigan residents and is good for Michigan’s auto industry, an important part of Michigan’s economic engine,” Snyder said. “This change brings Michigan in line with the vast majority of states. It’s another example of how we can make Michigan’s tax structure fairer while fueling our continued comeback.”

Snyder said the plan strikes a smart, fiscally responsible balance. The amount saved would be phased in gradually, offering families some immediate tax relief while spreading out the impact on the state budget.

The bills, approved strong bipartisan support, were sponsored by state Rep. Andrea LaFontaine and state Sen. Dave Robertson.

“Since before I even took office I have been thinking of ways to provide tax relief for Michigan families,” LaFontaine said. “We are now able to offer a tax break on the price of a new or used car that will make a significant, positive impact on their wallets. As economic activity continues to climb and personal income grows, we are reducing the tax burden on a purchase that is the second highest budget item for most households. I am proud to see this bill become law so it can help every Michigan resident save money.”

Robertson said the law is “the culmination of years of hard work to agree on a solution that will help boost our economy and reduce the tax burden on Michigan families. These reforms will help consumers save money when they buy a car, boat or RV in Michigan and enable our local dealers to better compete with out-of-state sellers,” Robertson said. “I thank Gov. Snyder for standing up for Michigan job providers and consumers by making this long-awaited tax relief a reality.”

The bills will gradually exempt from the sales tax the value of a traded-in vehicle on the purchase of a new vehicle. Approved with strong bipartisan support, the bills initially exempt the first $2,000 of a vehicle’s trade-in value. The amount will grow by $500 each year until reaching $14,000. At that point, the cap will be eliminated.

People purchasing boats would see the full savings immediately.

Snyder signed the bill into law at Shaheen Chevrolet, a Lansing auto dealership, with lawmakers, consumers, workers and representatives from the auto industry.

“I am thrilled to see sales tax on the difference become law in Michigan,” said Doug Fox, president of Michigan Automobile Dealers Association. “This is an immediate consumer savings, right at the point of sale, with no additional forms or qualifications necessary. It is a direct and meaningful tax credit for consumers who are stimulating the economy through the purchase of a new or used vehicle.”

House Bill 4234 now becomes Public Act 159 of 2013 and Senate Bill 89 becomes Public Act 160 of 2013.


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