Governor announces Michigan tax rebate on new vehicles to lower prices and boost sales

Gov. Gretchen Whitmer has proposed a new plan that would offer tax rebates to help residents save on new cars. Specifically, Michigan’s new vehicle tax rebate aims to lower vehicle prices and increase sales across the state.

Michigan Tax Refund on New Cars: What is it?

On Wednesday, Governor Gretchen Whitmer announced a new “MI Car Rebate” plan. The goal of the rebate plan is to increase sales of new electric, hybrid and conventional combustion vehicles in the state. The state recently signed new contracts with the United Auto Workers (UAW) and the Big Three.

“The MI Vehicle Rebate will save you money on a new car when you take the keys out of the dealership,” Governor Whitmer said in a statement.

In her upcoming State of the State address, Governor Whitmer plans to ask lawmakers to set aside $25 million to fund MI vehicle rebates. The state will continue to provide rebates until all $25 million is spent.

Whitmer’s MI car rebate plan differs slightly from the plan the governor introduced in last year’s State of the State address. Last year’s plan, which failed to be funded in the annual budget, limited rebates for electric vehicles and charging equipment to $2,500.

Whitmer’s announcement follows recent reports of a downturn and layoffs in Michigan’s auto industry. For example, earlier this week Ford Motor Co. decided to reduce production of the all-electric F-150 Lightning pickup truck.

MI Vehicle Rebate Plan: How does it work?

If approved, a Michigan tax rebate on a new car would lower the cost of the vehicle (electric, hybrid or conventional) by between $1,000 and $2,500. When combined with federal incentives, rebates can help residents save up to $10,000.

New vehicles in four categories are eligible for the rebate:

• A $2,500 rebate on new battery electric or hybrid vehicles manufactured in facilities where workers are represented by the United Auto Workers.
• $2,000 rebate when you purchase a new battery electric or hybrid vehicle.
• A $1,500 rebate on new internal combustion engine vehicles manufactured at facilities whose workers are represented by the United Auto Workers.
• $1,000 rebate on all other new internal combustion engine vehicles.

Specifically, the Governor is proposing a tax rebate of $2,500 for union-built electric or hybrid vehicles and $2,000 for non-union-built electric or hybrid vehicles. The Michigan tax rebate does not apply to used vehicles.

The rebate is applied to the final price at the time of vehicle purchase. Once the buyer decides to purchase the vehicle, the seller will contact the Treasury Department and receive a tax refund voucher. Once approved, the seller will deduct the rebate amount from the vehicle’s final price, depending on the vehicle category.