Michigan Sales Tax

**expatriate** · October-25-22, 02:40 PM

I was hoping that someone on this forum might know the answer to this question before I dive too deeply into the codes & regs.

If I buy a loaf of bread at the grocery store for home consumption I do not have to pay sales tax, but I noticed that if I buy the same bread at a bakery for the same purpose they charge me sales tax. The regs in this regard seem a bit fuzzy.

"The sales tax rules governing bakeries in Michigan are actually complex. The rules state that baked goods sold for home consumption [[i.e. individual consumers) are not considered prepared foods and exempt from sales tax. This would include bread, rolls, buns, biscuits, bagels, croissants, pastries, doughnuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas, sold without eating utensils. However, if the items are prepared foods, then they are subject to sales tax. An example would be a food served at a heated state such as a hot sandwich."

**Gistok** · October-26-22, 07:15 PM

In Michigan if you buy food from a retailer, you pay no sales tax. But if you were in a restaurant [or perhaps a bakery that had a cafe attached] and you ordered bread as a menu item [even as a carryout item] where they were to charge extra for it... then that has the 6% sales tax added.

If you buy pizza from a chain [Dominos, Little Caesars, etc], then you pay sales tax for it. But if you buy a frozen pizza at a store... then no sales tax.

But you are correct that it can get fuzzy. A slice of Pizza at a 7-Eleven was cooked on the premises, and therefore is also taxed.

**expatriate** · October-27-22, 10:07 AM

Originally Posted by Gistok

In Michigan if you buy food from a retailer, you pay no sales tax. But if you were in a restaurant [or perhaps a bakery that had a cafe attached] and you ordered bread as a menu item [even as a carryout item] where they were to charge extra for it... then that has the 6% sales tax added.

If you buy pizza from a chain [Dominos, Little Caesars, etc], then you pay sales tax for it. But if you buy a frozen pizza at a store... then no sales tax.

But you are correct that it can get fuzzy. A slice of Pizza at a 7-Eleven was cooked on the premises, and therefore is also taxed.

Strange. Panera did not charge me sales tax on my baguette, but my other local bakery coffee shop did. Or at least "tax" was a line item on my receipt. Possibly Panera just folds the tax into the price and pays it to the state. In both cases I did not use the cafe part of the business, but just stopped in for the bread to take home.

**401don** · October-27-22, 10:11 AM

Originally Posted by expatriate

Strange. Panera did not charge me sales tax on my baguette, but my other local bakery coffee shop did. Or at least "tax" was a line item on my receipt. Possibly Panera just folds the tax into the price and pays it to the state. In both cases I did not use the cafe part of the business, but just stopped in for the bread to take home.

Sounds like Mich. is similar to Ontario. You pay tax on any prepared foods. In Ont. there's no tax under 4.00 so you'd see a lot of fast food combos for 3.99. Those days are gone. About 25 yrs. ago the Finance Minister had his local riding office in our office building. Whenever he was in line at the cafeteria, the owner would ring in lunch items separately so there was no tax. His little dig at the guy.

**Ray1936** · October-27-22, 01:14 PM

Same confusing mess here in Nevada. But hooray, there is no state income tax.

**MarvelousMarvins** · October-28-22, 12:54 PM

From what I have always understood it is on "on site" prepared food, if its ready to eat as a meal it's taxed or if it's made on site it's taxed.
Not sure if that's 100% accurate but it's pretty close.

**Richard** · October-28-22, 02:38 PM

Originally Posted by Ray1936

Same confusing mess here in Nevada. But hooray, there is no state income tax.

Fla the same way with no state tax,no tax on dairy products purchased in the supermarket but buy an omelet and it gets taxed.

No tax on labor but add a purchased item into the labor and it all gets taxed.

Depending on the county the tax varies,we are 7% next county is 6%,it’s actually a pretty simple system and does not create a paperwork nightmare for businesses and confusion for the consumer.

My UK friends always become confused when it comes to the checkout because their tax is included in the price of the item on the shelf and not figured separately.

**Gistok** · October-28-22, 10:00 PM

^ In Europe in general... their tax on merchandise is called VAT [[Value Added Tax)... and is almost always included in the price marked. If you buy something via mail order from Europe, that VAT is not included when shipping overseas.

VAT rates in Europe vary from 17% up to 27%... YIKES!!

https://taxfoundation.org/value-adde...tes-in-europe/

**401don** · October-29-22, 07:03 AM

Originally Posted by Gistok

^ In Europe in general... their tax on merchandise is called VAT [[Value Added Tax)... and is almost always included in the price marked. If you buy something via mail order from Europe, that VAT is not included when shipping overseas.

VAT rates in Europe vary from 17% up to 27%... YIKES!!

https://taxfoundation.org/value-adde...tes-in-europe/

In Canada we have a value added tax, the GST. It's 5% Federal and the rest Provincial, so in Ontario the 8% is added to make it 13%. Most countries added a VAT as their economies became more service oriented and less
manufacturing. The U.S. doesn't but then nobody cares about debt any more.