Renting Heavy Equipment May Be Subject to a New 2% Specific Tax on the Rental in Michigan

Public Act 46 of 2022 was signed by the Governor on March 23, 2022. The Act creates an exemption for qualified heavy equipment rental personal property beginning December 31, 2022. The exemption is not mandatory on the qualified renter.

Qualified heavy equipment rental personal property (QHERPP) is any construction, earthmoving, or industrial equipment that is mobile and rented to customers by a qualified renter. This does not include handheld tools or equipment designed for oil and gas exploration, mining, or forestry.

QHERPP includes, but is not limited to, the following:

• A self-propelled vehicle that is not designed to be driven on the highway
• Industrial electrical generation equipment
• Industrial lift equipment
• Industrial material handling equipment
• Industrial portable heating, ventilation, and air conditioning equipment
• Industrial compressors, generators, or pumps
• Equipment used in shoring, shielding, and ground trenching
• Equipment or vehicles not subject to titling under the Michigan Vehicle Code, 1949 PA 300, MCL 257.1 to 257.923
• Portable containers or office trailers
• Equipment used to support construction or industrial jobs

Beginning in 2023, if you rent QHERPP from a heavy equipment renter in Michigan on a short-term basis (less than 365 days), you could be subject to a new 2% specific tax on the rental payment. Qualified heavy equipment renters who elect to apply for a personal property tax exemption will now have to collect this new tax from their renters.