Requirements for the Michigan Agriculture Exemption for Sales Tax

Sales tax is set at 6 percent in the state of Michigan for all taxable retail sales, with some concessions, however. There are certain tax exemptions for people who own farms and work in agricultural production, but to claim the exemption you must meet the requirements for qualification.

Only farm owners qualify for the exemption. A farm is defined by USDA as a place where over $1,000 in gross sales of agricultural products were produced and/or sold, or where over $1,000 in agricultural products were expected to be sold (but might not have been due to a disastrous weather event, for example). The production of agricultural products must be the business goal of the farm.

Some items, while they may be bought for farm use, might not qualify for the sales tax exemption. While items used for farming purposes, such as grain drying equipment and gas and electricity used to power farm equipment, do qualify, items used to build or repair on-farm buildings do not qualify. The official website of the government of Michigan lists qualifying items as "tangible personal property used in tilling, planting, caring for or harvesting things of the soil, in the breeding, raising or caring of livestock poultry or horticultural products for further growth."

When you make an agricultural purchase you wish to be tax-exempt, you must submit Form 3372, the Michigan Sales and Use Tax Certificate of Exemption, to the vendor from whom you are purchasing the items. This form can be found on Michigan's government website. It is recommended that you keep all paperwork for a period of four years post-purchase, as you may be audited.