LANSING, Mich. — For years, Michigan drivers paid two taxes when filling up their cars, but starting Jan. 1, that is changing.
“Michigan had been in the minority of states that, on top of the wholesale price of gasoline, on top all the other taxes, the state gasoline tax, the federal gasoline tax, the state of Michigan had charged sales tax,” GasBuddy Head of Petroleum Analysis Patrick De Haan said.
Drivers paid the 6% sales tax on top of a 31 cent gas flat tax per gallon.
When the legislature passed the budget in October, they made roads a priority, setting aside $2 billion for improvements.
To pay for it, they eliminated the sales tax on gas, which sent money to schools and local governments.
The remaining gas tax will rise to 52.4 cents per gallon, and continue to grow yearly with inflation.
“You may not see the price go up five cents a gallon at midnight,” De Haan said. “The next time you go to the pump into January, that will likely be assessed in one of the price cycles that Michigan generally sees every week and a half to three weeks.”
An analysis by the Tax Foundation showed Michigan had the sixth-highest gas taxes in the nation in 2025, and that is increasing.
De Haan says Michigan drivers will be paying, on average, $27 more a year. He says, however, the gas tax change comes at a decent time, when Michigan drivers are paying about $2.74 a gallon.
“Michigan’s average price is right now about 39 cents below last year. We’ve also seen about a 19 cent drop from a month ago,” De Haan said. “So all things looking good. Not that there’s good timing for any tax increase at all, but this is happening at a time of year that gas prices in Michigan are amongst the lowest we’ve seen in some four years.”
Gas-powered cars aren’t the only ones contributing. Those that don’t need gas or that use less will see higher registration surcharges with the Secretary of State.
Plug-in hybrids will cost $80 to register, while electric vehicles will set drivers back $160.
