Lansing, MI – Michigan lawmakers are considering a major change in how fuel is taxed as part of the Fiscal Year 2026 budget agreement, with discussions centering on removing the state sales tax on motor fuels and shifting that revenue into the fuel tax dedicated to transportation.
According to the Michigan Department of Transportation’s Talking Michigan Transportation podcast, the debate revisits findings from a 2024 poll showing that an overwhelming majority of voters want the money they pay at the gas pump directed to fixing the state’s roads and bridges.
Currently, Michigan’s 6 percent sales tax on fuel does not go to infrastructure. By law, those dollars are divided between the state’s school aid fund, local revenue sharing, and a minor portion for public transit. The proposed shift would instead allocate those dollars directly to transportation projects, a change that could reshape how Michigan funds its aging roadways.
Bernie Porn, president of the Lansing-based polling firm EPIC-MRA, said the survey results showed strong bipartisan support for redirecting the tax. “Voters believe the money they spend at the pump should go toward improving roads and bridges, not elsewhere,” Porn explained.
The change remains a point of negotiation in Lansing as lawmakers finalize the state’s spending plan. If approved, the move could mark a significant policy shift for Michigan drivers and commuters in 2026.
