Michigan — Sales Tax On Software Maintenance

In Michigan , the taxability of software maintenance agreements depends heavily on whether the contract is or optional , and the nature of the software it supports. Key Taxability Rules for Maintenance

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).

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

Agreements that strictly provide services like troubleshooting, technical assistance, or helpdesk access are generally exempt from tax.