Michigan’s gas tax is set to be up by 1.4 cents per gallon starting on January 1st, 2023, due to an automatic adjustment written into state law. This will cause state gas tax to move from 27.2 cents per gallon to 28.6 cents per gallon, according to a statement from the Michigan Treasury (Dec. 1st).
The set-in-stone law requires the gas tax to increase each year. From 2022 onward, the formula calls for an increase of either 5% or the inflation rate – whichever is lower. Because inflation has hovered around 8% in the past year, the gas tax will only go up by the maximum threshold of 5% in 2023. The increase applies to gasoline, diesel, and alternative fuels.
When combining state gas and sales taxes plus the 18.4-cent federal gas tax, Michigan’s total gas tax in July 2022 was 70.1 cents per gallon – fluctuating on a monthly basis because the 6% sales tax on gas equates to a higher amount per gallon when gas prices result in a higher percentile. Michigan had the sixth-highest overall gas tax in the United States in July (according to the U.S. Energy Information Administration).
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In July, the only states with a higher gas tax were California, Illinois, Indiana, Pennsylvania, and Washington. However, states with the lowest gas tax include Alaska, New York, Mississippi, Hawaii, and New Mexico.
Michigan lawmakers considered suspending the state’s gas tax in 2022 due to the sudden rising prices, but the result ended up being rather inconclusive and talks have broken down.
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