Michigan
Your Guide to Hiring a Home Improvement Contractor in Michigan
In Michigan, most construction and remodeling projects on residential properties require a state-issued license if the total value of the work is $600 or more (including labor and materials). The licensing authority is the Michigan Department of Licensing and Regulatory Affairs (LARA).
Types of Licenses
Contractors performing residential work must hold one of two main licenses:
- Residential Builder License: This license is required for contractors who construct a new residential structure or combination of residential and commercial structures. This is generally the equivalent of a "general contractor" for residential projects.
- Maintenance & Alteration Contractor (M&A) License: This license permits work in specific trades or crafts only, such as roofing, carpentry, masonry, siding, or concrete work. M&A contractors can only accept contracts for the specific trades they are licensed for.
Requirements for a Residential Builder or M&A License
To obtain either license, an individual must generally:
- Be at least 18 years old.
- Complete a 60-hour prelicensure education program approved by LARA.
- Submit a detailed application to LARA, including proof of education and the necessary fees.
- Pass a comprehensive licensing exam administered by PSI. This exam covers business management, law, and construction codes. The M&A exam has a separate test for each trade classification.
How Sales Tax Applies to Home Service Projects
In Michigan, the application of the state's 6% sales tax to home services depends on what is being sold: a service or tangible personal property.
Services on Real Property are Generally Exempt: Labor and services for construction, remodeling, and permanent improvements to real property (like your house, garage, or land) are generally not taxable. This includes the labor for:
- Construction and home improvement.
- Installing carpet, painting walls, and landscaping.
Contractors Pay Tax on Materials: Construction contractors are typically considered the final consumer of materials they purchase for a project (e.g., lumber, nails, wiring). They must pay the 6% sales tax on these materials at the time of purchase.
The Customer is Not Charged Sales Tax on the Labor/Mark-up: Since the contractor has already paid tax on the materials, the contractor does not charge the homeowner sales tax on the final contract price, even if it includes a mark-up on the materials.
Key Exception: If a contractor is only repairing or maintaining tangible personal property (like a TV or other machinery/appliance) that is not a permanent part of the real estate, the service might be taxable, especially if the labor and parts are not itemized separately on the invoice.
How to Verify a Contractor's License in Michigan
Before hiring a home service professional, always verify their license is valid, active, and covers the type of work you need done.
- The most reliable way to verify a contractor's license in Michigan is through the Department of Licensing and Regulatory Affairs (LARA).
- Online Verification: Visit the LARA Professional License Search page on the state's website and use the search tool to find the individual or business name.
- Ensure you select the correct License Type, such as "Residential Builder" or "Maintenance & Alteration Contractor."
- Phone Verification: If you are having trouble with the online system or need to speak to a representative, you can also call LARA directly at : 517-241-9316 (Licensing Division)
Disclaimer
This information is provided for reference and educational purposes only. It is not intended as legal, tax, or professional advice. Licensing and tax laws are subject to change, and specific situations may require a professional opinion. Always consult with the Michigan Department of Licensing and Regulatory Affairs (LARA) or a qualified tax professional to confirm the current regulations and requirements applicable to your specific project or contractor.