Michigan to Increase Gas Tax in 2023

What’s New?

Starting Jan. 1, Michigan will increase its gas tax by 1.4 cents thanks to an automatic adjustment written into state law. 

According to Michigan legislation, and an automatic adjustment in the state law, Michigan state tax will increase from 27.2 cents per gallon to 28.6 cents per gallon.

A law from when Gov. Rick Snyder was in office requires the gas tax to increase annually. Starting in 2022, the formula calls for an increase of either 5% or the inflation rate, whichever is lower. 

Inflation has hovered around 8% in the past year, so the gas tax will only go up by a maximum of 5% in 2023.

When combining state gas and sales taxes plus the 18.4 cents federal gas tax, Michigan’s total gas tax this year was 70.1 cents per gallon. It changes monthly with gas prices.

Similar to California, Michigan lawmakers considered suspending the state’s gas tax because of rising prices at the pump, but couldn’t come to a deal.

Michigan had the sixth-highest overall gas tax in the nation in July, according to the U.S. Energy Information Administration. The only states with a higher gas tax were California, Illinois, Indiana, Pennsylvania, and Washington.

Conclusion

Since gas prices rely heavily on the market, the natural instability of the market in 2022 showed in the fluctuation of gas prices. According to NCSL, since 2013, 33 states and the District of Columbia have increased their gas tax. In 2020 Virginia and Washington DC increased their tax and in 2021 Colorado and Missouri followed. It’s important to note the state gas tax in Colorado is technically a fee, not a tax.

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