Michigan pay-per-mile pilot program: What to know

Michigan is looking at ways to make up declining transportation revenue as vehicles become more fuel efficient and electric vehicles become more prevalent. 

The state is exploring a road user charge program, also known as pay-per-mile. Here’s what to know: 

What is Michigan’s gas tax? 

The backstory:

Michigan taxes drivers at the gas pump and relies on that revenue to build and maintain the state’s roads, bridges and tunnels. 

The state changed how fuel is taxed in Michigan at the beginning of the year. Michigan drivers used to pay 6% sales tax in addition to a 31 cents per gallon motor fuel tax. 

By the numbers:

Currently, Michigan drivers do not pay sales tax on fuel and pay a motor fuel tax of 52.4 cents per gallon.

RELATED: Map: How much are federal, state gas taxes?

Dig deeper:

According to the State, this is where the motor fuel tax goes: 

• 34.4% to state highways 
• 34.4% to county roads 
• 19.2% to cities and villages 
• 9.8% to public transit fund
• 2% to the Recreation Improvement Account for local recreation projects 

What is a road user charge (RUC)? 

Big picture view:

A road user charge is an alternative way to charge drivers to use the roads. Under the program, drivers of all vehicles pay a flat fee of a few cents for each mile driven instead of paying state fuel taxes. 

This program is also known as pay-per-mile, mileage-based user fees, distance-based fees or vehicle-miles-traveled taxes. 

Four states have operational RCU programs: Oregon, Utah, Virginia and Hawaii. Vermont will become the fifth state in January of 2027. 

How it works :

Your driving data could be reported to the state in a variety of ways, including: 

• Plug-in devices
• Smartphone apps 
• Self-reporting via vehicle factory settings
• Self-reporting via manual data

The other side:

One of the difficulties of implementing a RUC is charging out-of-state drivers, or accounting for drivers who frequently cross state or international borders. 

Michigan’s pay-per-mile pilot program 

Timeline:

MDOT began studying how an RUC could work and benefit Michigan in 2024. 

Now, a pilot program is set to launch in February 2027, last for six months and involve 1,000 willing participants, according to Jennifer Roberts, the RUC discipline lead at CDM Smith. CDM Smith is the consultant selected by MDOT to transition the state’s primary road funding formula. 

It’s unclear right now how participants will report their data, or how much they’ll pay per mile. 

What's next:

Experts will then look at the results of the pilot program and handle revenue projection before giving a recommendation to the State.  

What they're saying:

"Over time, as our fleet has evolved and we’ve got a lot of different vehicles on the roads, that link between road usage and payment has really become flawed, if you will, or a little more broken," said Roberts in a recent MDOT podcast episode. 

"It started out as an EV problem; I think that was an easy place to point. But I think the data and research has shown us that improvements in fuel economy are also a big driver, and actually the bigger driver in the problems we’re seeing today (is) because the bottom line is people are buying less gas. That is a good thing for our environment, but that doesn’t work for how we fund transportation today," she added.

Michigan EV registration fee

Meanwhile:

Michigan has already implemented additional fees for electric and hybrid vehicles to make up for lost gas tax revenue. The fees are some of the highest in the nation:

• The EV fee is $267 and is charged in addition to any regular registration fees. The EV fee for trucks and buses is $367. 
• The PHEV fee is $113 and is charged in addition to the regular registration fees. The PHEV fee for trucks and buses is $183. 

The backstory:

Electric car sales in the U.S. rose from just 0.1% of total car sales in 2011 to 4.6% in 2021, according to the U.S. Bureau of Labor Statistics. S&P Global Mobility forecasts they will make up 40% of the sales by 2030, while other projections are even rosier.