Michigan Gas Prices to Rise in 2026: Here’s Why

Starting January 1, 2026, Michigan drivers will face increased gas prices due to modifications in the state’s fuel tax system. The changes are set to eliminate a 6% sales tax on gasoline, which will be replaced by a raised cents-per-gallon fuel tax. This adjustment will boost the state fuel tax to approximately 52.4 cents per gallon from the current 31 cents. The entire revenue from the updated fuel tax structure will be allocated specifically for transportation purposes, unlike the previous sales tax which fed into the general fund.

Impacts of the New Fuel Tax Structure

State officials intend for this change to provide a stable, long-term funding source for the repair and maintenance of Michigan’s roads and bridges. Governor Gretchen Whitmer emphasized her commitment to road repairs, stating, “This year’s balanced, bipartisan budget makes a record, nearly $2 billion annual investment to fix our state and local roads.” This initiative aims to enhance safety and efficiency for all drivers.

Inflation Adjustment and Future Costs

The increase in gas prices stems from the annual adjustment of the fuel tax linked to inflation. The Treasury Department has determined a 2.7% increase for 2026.

Fees for Electric and Hybrid Vehicles

Electric and plug-in hybrid vehicle owners will also see a rise in their costs. The transportation funding plan includes an increase in registration fees to compensate for the reduced contributions these vehicles make to fuel taxes. The House Fiscal Agency reports:

• Annual fees for plug-in hybrid vehicles will rise by approximately $50.
• Annual fees for fully electric vehicles will jump by about $100.

These adjustments are expected to generate around $11 million in restricted revenue, aimed at supporting road repairs and infrastructure improvements across the state.

Conclusion

The modifications to Michigan’s fuel tax system and the subsequent rise in gas prices are positioned to ensure the funding of essential road infrastructure. As these changes take effect in 2026, both traditional and electric vehicle drivers will need to prepare for increased costs at the pump and during vehicle registrations.