I'm not familiar with MI specifically. But, in most states you get the credit at the time you buy the car, at the dealership, not when you file your income tax return.
"Vehicle owners trading in a car or truck will receive a sales tax credit for the vehicle’s trade-in value up to a maximum of $6,000. This is a $1,000 increase from the maximum of $5,000 allowed for 2019. Implementation of the sales tax trade-in credit requires new calculations on transactions with a trade-in. A 2020 Trade-In Sales Tax Credit Calculation Worksheet has been created to help dealers calculate the trade-in sales tax credit. The 2020 worksheet calculates the correct trade-in sales tax credit but isn’t submitted with the Form Rd-108, “Application for Title and Registration” to the Michigan Secretary of State."
https://www.bradyware.com/michigan-state-and-local-tax-updates-january-2020/
