Beginning January 1, 2026, the Heavy Equipment Owners Excise Tax rate will increase from 2% to 2.71%.
Why is the tax rate changing?
The Heavy Equipment Owners Excise Tax rate change is legally required per MCL 211.9p. The statute calls for a one-time tax rate change and provides a formula to ensure that the Heavy Equipment Owners Excise tax revenue reflects the replaced ad valorem property tax. Treasury completed the recalculation based on validated data received from taxpayers and assessors.
How will the tax rate be implemented?
Contracts Billed in 2025, Payment Received by January 31, 2026
If you billed your customer for a qualified heavy equipment rental initiated in 2025 and the customer pays you on or before January 31, 2026, those transactions are subject to the 2% tax rate.
Report these rentals on your 2025 fourth quarterly return due January 31, 2026. Penalty will not be issued for fourth quarter 2025 returns that are completed in accordance with this notice and paid in full by February 20, 2026.
Contracts Billed in 2025, Payment Received after January 31, 2026
If you billed your customer for a qualified heavy equipment rental initiated in 2025 and the customer pays you after January 31, 2026, those transactions are subject to the 2.71% tax rate.
These rentals should be reported to the quarter that the payment is received. The 2026 quarterly return form will be available on Treasury’s Heavy Equipment Owners Excise Tax webpage on February 21, 2026.
2026 Contracts
Qualified heavy equipment rental contracts initiated on or after January 1, 2026 are subject to the 2.71% tax rate.
These rentals should be reported to the quarter that the payment is received. The 2026 quarterly return form will be available on Treasury’s Heavy Equipment Owners Excise Tax webpage on February 21, 2026.
Questions?
Please email treas-heavyequip-customer-support@michigan.gov with any questions or concerns.
