Budget & Taxes (Procurement)

This bill amends Michigan's sales tax law to maintain an existing exemption for watercraft trade-ins. It allows buyers to apply a credit for the agreed-upon value of a titled or documented watercraft (documented by the U.S. Coast Guard) when purchasing a new or used watercraft from a dealer, reducing the taxable sales price. The credit must be separately stated on the invoice and does not apply to leases or rentals. This directly affects watercraft dealers and customers trading in boats, as it lowers the sales tax owed on the new purchase.

HB 5331 prohibits state agencies, local governments, universities, community colleges, and other entities receiving state funds from purchasing certain drones. It extends the same drone purchase restrictions that apply to the federal government to these Michigan entities. The bill amends Michigan's Management and Budget Act to require these organizations to follow federal guidelines when acquiring drones with state money. This directly affects any state-funded organization that might otherwise buy drones for operations.

HB 4375 amends Michigan's Use Tax Act to limit the tax credit for trade-in value when purchasing new vehicles. It caps the deductible trade-in value at $5,000 for motor vehicles or recreational vehicles (previously $2,000, increased annually until 2018). This change directly affects vehicle buyers and dealers in transactions involving trade-ins, as it reduces the amount that can be offset against the purchase price for tax calculation purposes. The bill updates Section 2(f)(xii) of the Use Tax Act to reflect this $5,000 maximum. The change became effective immediately after the bill passed the Michigan House on October 23, 2025.