Gross proceeds from retail sale of tangible personal property for use or consumption. Also includes certain conditional and installment lease sales; sales to consumers of electricity, gas, and steam; and sales to persons in real estate construction and improvement business. Certain sales with the following characteristics are exempt from taxation, as follows:

Exemptions based on status of purchaser:

• property not purchased for resale by various nonprofit organizations and used primarily to carry out the organization's purposes;
• property sold to churches for noncommercial purposes and certain vans and buses used to transport persons for religious purposes;
• food sold to enrolled students by an educational institution not operated for profit;
• property affixed to the real estate of nonprofit hospitals and nonprofit housing, including county long-term medical care facilities;
• certain property sold to commercial radio and television station licensees;
• vehicles not purchased for resale which are used by nonprofit corporations organized exclusively to provide a community with ambulance or fire department service;
• property purchased with scrip by inmates in correctional or penal institutions;
• textbooks sold by a school to kindergarten through 12th grade students;
• vehicles which are purchased by nonresident active military personnel for titling in his or her home state;
• property purchased for use in a "qualified business activity" as defined in the Enterprise Zone Act;
• property sold to certain businesses engaged in a high technology activity;
• property sold to the federal government or to an instrumentality thereof;
• tangible personal property for fund-raising purposes purchased by certain nonprofit organizations with calendar year sales of less than $5,000;
• trucks and trailers owned by motor carriers engaged in interstate commerce to the extent of out-of-state usage;
• passenger or cargo aircraft with a certified takeoff weight of at least 6,000 pounds, or parts and materials (except shop equipment or fuel) sold to a domestic air carrier.
• employees of resturaunts for food provided by their employer;
• motor vehicles, recreational watercraft, snowmobiles, or all terrain vehicles, and mobile homes sold to resident tribal members if the purchased item is for personal use and is to be used on the resident tribal member's tribe agreement area.

Exemptions based on item purchased:

• copyrighted motion picture films, newspapers, and periodicals classified as second class mail;
• hearing aids, contact lenses if prescribed for a specific disease precluding the use of eyeglasses, prosthetic devices, and eyeglasses prescribed by an ophthalmologist, optometrist, or optician;
• prescription drugs for human use;
• food for human use not prepared for immediate consumption;
• beverage containers to the extent of any deposits;
• railroad cars, locomotives, and accessories;
• vehicles to the extent of any refund of the purchase price because the vehicle is returned pursuant to the automobile lemon law;
• commercial advertising elements;
• non-alcoholic beverages in sealed containers or food not artificially heated or cooled that are sold from a mobile facility or vending machine, except fresh fruit; tax may be paid on either sales of non-exempt vended food or sum of 45% of all vended sales other than carbonated beverages;
• water delivered through water mains or in bulk tanks in amounts over 500 gallons;
• personal property for resale, for lease if rental receipts are subject to Use Tax, and for demonstration purposes;
• partial exemption (from two percentage points of the tax rate): sales for residential use of electricity, natural gas, and home heating fuel;
• investment coins and bullion;
• certain aircraft and aircraft parts temporarily located in Michigan.

Exemptions based on transaction type:

• certain food or tangible personal property purchased with federal food stamps;
• property which is part of a drop shipment;
• property which results in uncollectible debt.

Exemptions based on status of seller:

• certain vending machine merchandise to the extent of any commissions paid to certain tax-exempt organizations;
• property on an isolated basis by property owners not required to have Sales Tax license;
• property in corporate sponsor contracts sold by the organizing entity of the Ryder Cup, the Super Bowl, the Professional Golfers Association Championship, the men's college basketball championship, and the men's college hockey championship.

Exemptions based on the use of the property or service:

• tangible personal property purchased by a person engaged in constructing, altering, repairing, or improving real estate if it is to be affixed or made a structural part of a sanctuary;
• specially-ordered commercial vessels of at least 500 tons engaged in interstate commerce and fuel, provisions, and supplies therefore;
• property used in production of horticultural or agricultural products as a business enterprise;
• property used or consumed in industrial processing;
• certain property used to provide any combination of telecommunications services which are subject to the Use Tax;
• certain products, equipment, machinery, and utilities used or consumed by an industrial laundry;
• grain drying equipment and natural or propane gas used to fuel the equipment for agricultural purposes;
• computer equipment for data transfer by companies whose business includes publishing doctoral dissertations and information archiving and sells the majority of its products to non-profit organizations exempt from the federal income tax.