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Reps. Tisdel, Ellison celebrate new law to simplify tax collection on heavy rental equipment
RELEASE|March 17, 2022
Contact: Mark Tisdel

State Reps. Mark Tisdel and Jim Ellison today touted their successful bipartisan effort to simplify a local tax for Michigan businesses.

Tisdel, R-Rochester Hills, and Ellison, D-Royal Oak, sponsored House Bills 4833 and 4834 to replace the personal property tax (PPT) on rented heavy equipment with a tax that will simplify the collection process for businesses and local governments. Gov. Gretchen Whitmer today signed HB 4833 into law, and she will soon sign HB 4834, which was amended and approved by the Legislature earlier this week.

“When a Michigan resident needs heavy equipment for a project at a home or small business — anything from excavators to electric generators and from heating units to hydraulic lifts — rental businesses are ready with their supplies,” Tisdel said. “Simplifying the tax on this equipment will not only help the industry, but will also remove unnecessary busy work for local assessors. With the reform Rep. Ellison and I have shepherded into law, we are making local governments more efficient without cutting revenue for community services.”

Ellison said: “Most of us don’t have industrial machinery lying around in our garages, but the heavy equipment rental industry is there if we need it. The nature of rental business means equipment is constantly moving to different locations, making tax assessment more of a hassle for everyone involved. Our new law simplifies the tax and the process that comes with it. This successful change to Michigan law is only possible because of the good will of industry businesses and local governments who helped formulate the solution. I am grateful for their efforts, as well as for Rep. Tisdel’s partnership, on this much-needed legislation.”

Previously under Michigan law, PPT on heavy equipment rentals has been assessed at the end of the year based on where the equipment is located, meaning local assessors must determine what equipment is presently stored in their respective jurisdictions.

The new law will exempt rented heavy equipment from PPT. The exemption applies to mobile construction, earthmoving or industrial equipment that is rented to customers, excluding equipment designed specifically for the oil and gas exploration, mining, and forestry industries. Exempted equipment will instead be subject to a 2% state excise tax on each rental transaction, which will be distributed to local governments. To ensure the tax rate is a fair substitute for PPT, the Michigan Department of Treasury will compare the amounts of the new tax and PPT for a period of three years, and the tax will be adjusted accordingly.

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