Michigan overhauls gas tax system to boost road funding

LANSING, MI (WTVB) – Michigan drivers will see changes at the pump after lawmakers approved a major overhaul of the state’s gas tax system.

The new law eliminates the six percent sales tax on fuel and replaces it with a 20-cent-per-gallon increase in the state fuel tax, directing all revenue toward roads and transit. Lawmakers call the change “revenue neutral,” though drivers could pay slightly more or less depending on gas prices.

The plan is expected to raise more than a billion dollars for transportation funding next year. Electric and hybrid vehicle owners will also see higher registration fees tied to the fuel tax increase.