HB 4183: Transportation: motor fuel tax; motor fuel tax; increase and expand applicability. Amends sec. 8 of 2000 PA 403 (MCL 207.1008). TIE BAR WITH: HB 4180'25, HB 4181'25, HB 4182'25, SB 0578'25 - Michigan

As Passed by the Senate → Substitute (H-2) · 6 edits

MODERATE

The House substitute replaces the Senate-passed version with a significantly restructured motor fuel tax schedule. It adds a new fixed rate of 51 cents per gallon for both gasoline and diesel effective October 1, 2025 (nearly doubling the prior 26.3-cent rate), modifies the inflation adjustment formula to account for the mid-year rate jump, removes an entire one-time inventory tax provision that would have taxed fuel held in storage at year-end 2025, and expands the list of companion bills required for the act to take effect.

FISCAL

A new fixed tax rate of 51 cents per gallon on gasoline takes effect October 1, 2025, replacing the prior 26.3-cent rate that had been in place since January 1, 2017.

A new fixed tax rate of 51 cents per gallon on diesel fuel takes effect October 1, 2025, replacing the prior 26.3-cent rate that had been in place since January 1, 2017.

The inflation adjustment formula for the January 1, 2026 rate is changed to a special one-time calculation: multiply the average 2025 rate by the lesser of 5% or the inflation rate, add that product to the October 1, 2025 rate (51 cents), and round to the nearest 1/10 of a cent. This accounts for two different rates being in effect during 2025.

Subsections (10) through (13) are entirely deleted. These provisions imposed a one-time tax on motor fuel held in storage as of December 31, 2025, equal to the difference between the January 1, 2025 and January 1, 2026 rates, with inventory reporting due by February 20, 2026.

ENFORCEMENT

The department must publish notice of the increased rate effective October 1, 2025 no later than September 1, 2025, providing a specific advance-notice deadline for this mid-year increase.

SCOPE

The enacting section now requires eight companion House bills (4180, 4181, 4182, 4184, 4185, 4186, 4187, and 4230) to be enacted for this act to take effect. Senate Bill 578 is removed from the list and four new House bills (4184-4187) plus HB 4230 are added.

House Introduced Bill → As Passed by the House · 5 edits · Mar 19, 2025

MODERATE

This bill amends Michigan's Motor Fuel Tax Act to update gasoline and diesel tax rates, establish an inflation-adjusted rate mechanism starting in 2022, and modify the conditions under which the bill takes effect by adding a new related bill to the required package.

Scope change

The bill's scope remains focused on motor fuel taxation, but the specific tax rates and the mechanism for calculating future rates have been significantly expanded and modified.

TIMELINE

Gasoline tax rates were updated to reflect new rates: 19 cents through 2016, 26.3 cents from 2017-2025, and 51 cents starting October 1, 2025. Diesel rates were similarly updated to 15 cents through 2016, 26.3 cents from 2017-2025, and 51 cents starting October 1, 2025.

The calculation for the January 1, 2026 tax rate was changed to use the average rate from the 2025 calendar year rather than the rate in effect during the immediately preceding calendar year.

REQUIREMENT

A new provision was added requiring the Department of Treasury to calculate future tax rates starting January 1, 2022, by multiplying the previous year's rate by 1 plus the lesser of 0.05 or the inflation rate, rounded to the nearest 1/10 of a cent.

ENFORCEMENT

A new requirement was added for the department to publish notice of the increased tax rate beginning October 1, 2025, no later than September 1, 2025.

The effective date conditions for the entire amendatory act were modified by adding House Bill No. 4230 to the list of bills that must be enacted for this bill to take effect.

As Passed by the House → As Passed by the Senate · 6 edits · Oct 3, 2025

MODERATE

The Senate version of HB 4183 significantly restructures the motor fuel tax system by removing fixed future tax rate increases and replacing them with an inflation-based adjustment mechanism. It also adds a new tax on excess motor fuel inventory held at year-end 2025, creating a one-time surcharge on stored fuel. The bill now requires coordination with other legislation and expands the scope of fuel subject to taxation.

Scope change

The bill now applies to excess motor fuel inventory held at year-end 2025, expanding beyond just the standard fuel tax to include a surcharge on stored fuel. The scope of taxable fuel now includes specific conditions for licensed suppliers and importers regarding inventory held outside terminals.

TIMELINE

Removed fixed tax rate increases scheduled for 2025 and 2026; replaced with inflation-based rate adjustments starting January 1, 2026.

FISCAL

Added a new one-time tax on motor fuel inventory exceeding 3,000 gallons held as of December 31, 2025, calculated as the difference between 2025 and 2026 tax rates.

ELIGIBILITY

Changed tax applicability to include specific conditions for licensed suppliers and importers regarding fuel held outside bulk transfer systems.

REQUIREMENT

Added inventory reporting requirements requiring persons holding taxable fuel to report gallons to the department by February 20, 2026.

ENFORCEMENT

Added new subsections requiring inventory determinations and tax payments for excess fuel held at year-end 2025.

TECHNICAL

Changed enacting section requirements to include Senate Bill No. 578 as a condition for the bill to take effect.

Substitute (S-4) - 3 → House Concurred Bill · 5 edits

MODERATE

This bill was amended to correct formatting errors, fix grammatical issues, and add new provisions regarding motor fuel tax calculations and reporting requirements. The changes clarify how tax rates are determined for future years and establish new rules for taxing stored fuel at the end of 2025.

Scope change

The bill's scope was expanded to include new tax provisions for fuel stored at terminals and imported fuel, with specific conditions for when tax applies based on storage amounts and supplier/importer licensing status.

TECHNICAL

Corrected numerous grammatical errors and formatting inconsistencies throughout the document, including fixing repeated words like 'shall must' and 'is is'.

ELIGIBILITY

Added new provision (subsection 10(b)) requiring tax on nonexempt motor fuel held by persons outside bulk transfer systems in excess of 3,000 gallons as of December 31, 2025, if tax wasn't previously paid or accrued.

Added new provision allowing licensed importers to accrue tax on imported fuel if they meet specific conditions in sections 76, 82, and 104 regarding lawful importation.

REQUIREMENT

Added new subsections (11), (12), and (13) requiring inventory reporting by February 20, 2026, for fuel subject to the new tax provisions.

TIMELINE

Added effective date provisions requiring the bill to take effect only if companion bills (SB 578, HB 4180-4182) are also enacted into law.

Substitute (H-2) - 2 → Substitute (S-4) - 5 · 5 edits

MODERATE

This bill was amended to transition from a House version to a Senate version, with significant changes to fuel tax rates and effective dates. The most notable change is the removal of a specific 2025 tax increase provision that would have raised rates to 51 cents per gallon, replaced with a more gradual inflation-based adjustment mechanism. Additionally, new provisions were added to address tax liability for fuel held in storage at the end of 2025.

Scope change

The bill's scope was modified to change how fuel tax rates are calculated and implemented, particularly for the period after 2025. The Senate version removes a fixed tax increase scheduled for October 2025 and replaces it with an inflation-adjusted formula that continues through 2026 and beyond.

TIMELINE

Removed the specific provision that would have increased gasoline and diesel taxes to 51 cents per gallon beginning October 1, 2025.

REQUIREMENT

Added inflation-based rate adjustment mechanism that applies from January 1, 2026 through December 31, 2026, calculating rates based on 51 cents multiplied by 1 plus the lesser of 0.05 or the inflation rate.

New subsection requiring tax to be imposed on motor fuel held in storage by end users as of December 31, 2025, if the tax at 2025 rates was not previously paid.

Deleted the requirement for the department to publish notice of the increased rate beginning October 1, 2025, no longer than September 1, 2025, since that rate increase was removed.

TECHNICAL

Added 'removed' to the list of fuel types subject to tax in the opening section, expanding the scope of taxable fuel transactions.

Transportation: motor fuel tax; motor fuel tax; increase and expand applicability. Amends sec. 8 of 2000 PA 403 (MCL 207.1008). TIE BAR WITH: HB 4180'25, HB 4181'25, HB 4182'25, SB 0578'25

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