New Michigan Gas Tax Kicks In Jan. 1 — Here’s What It Means at the Pump

Beginning January 1, Michigan drivers will notice something different when they pull up to the pump: The tax you pay on every gallon of gas is going up.

What's Changing Jan. 1?

Under a major fuel tax overhaul taking effect Thursday, Michigan is ditching the 6 percent sales tax on gasoline and replacing it with a much higher flat excise tax. That means the state fuel tax jumps from about 31 cents per gallon to roughly 52–52.4 cents per gallon — about a 20–21-cent increase at the pump.

Drivers Will Now Pay One Tax Instead of Two

Under Michigan's old structure, drivers paid two taxes: A flat gas tax and a sales tax that increased when the price of gas went up. Beginning January 1, motorists will pay one flat fuel tax, regardless of what the per-gallon price is at the pump.

Officials insist the change won’t cause pump prices to jump as much as the tax increase sounds. Because the sales tax is gone, experts say drivers should only see roughly a penny or two added per gallon in what they actually pay at the pump — but, it'll still be more out of your pocket every time you fill up.

Remember 'Fix the Damn Roads?'

Lawmakers designed the new system so every cent collected goes straight to road and bridge repair — not into the general fund. That’s supposed to create a more stable funding stream for Michigan’s famously disastrous roads.

The per-gallon increase may sound minor, but for drivers who fill up weekly, it will add up quickly. As the new tax takes effect January 1, Michigan motorists will be paying a little more at the pump. However, the question remains: Will the promise of better roads in Michigan actually come to fruition?