How Michigan’s new fuel tax impacts drivers in 2026

Michigan has implemented a new fuel tax system effective January 1st, eliminating the 6% sales tax on gasoline and replacing it with a per-gallon tax increase from 31 cents to 52.4 cents. The additional revenue, adjusted yearly for inflation, is dedicated to road construction and repair, drawing mixed reactions from drivers. Additionally, a 24% wholesale tax on marijuana and funds from corporate income tax revenue are part of a broader package aiming to generate nearly $2 billion annually for transportation funding. Electric and plug-in hybrid vehicle drivers will also experience higher costs beginning in 2026.