Michigan's gas tax: how much is on a gallon of gas?

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For delivery based businesses that survived the pandemic, a whole new gut wrenching challenge has emerged with global oil price instability.

DETROIT (FOX 2) - If you've stopped to fill up your car at any point in the past few weeks or have been following news, you know that the price of gasoline is higher than we've experienced in years. In Michigan, we're paying some of the highest taxes per gallon in the nation and today's rate is because of a tax signed into law in 2015.

Nationwide, the price of regular gasoline on average hit an all-time high on Tuesday of $4.173. That's higher than the previous record set in 2008 ($4.10) and has prompted calls ban imports of Russian oil - something President Joe Biden will announce later in the day.

Why it costs you more to buy gas with a credit card in Michigan

Prices at the pump were rising long before Russia invaded Ukraine and have spiraled faster since the start of the war. The U.S. national average for a gallon of gasoline has soared over 45 cents a gallon in the past week, according to auto club AAA.

In Michigan, we're paying more than most due to the gas tax that's added to every single gallon that we buy.

Understanding the gas tax and how dropping the federal tax could help ease the pain

The price of gas is higher than we've ever experienced but how do our taxes factor into it? We broke down the math to better understand it - and learn how dropping the federal tax could really make a difference.

How much tax is on a gallon of gas in Michigan?

On January 1, 2022, Michigan drivers started paying a tax of a little more than 27 cents per gallon for the state motor tax (aka gas tax).

AAA reports the average price per gallon in Michigan on Tuesday, March 8, is $4.17. To buy 15 gallons, that would cost you a total of $62.55.

Let's break that down even further.

Of that $62.55 to fill up your tank, $10.02 is going to taxes alone. The state's motor fuel tax accounts for $3.94 while the state sales tax is $3.31. The other $2.76 is the federal motor fuel tax. In total, of your fill up of $62.55, 16.02% of your cost is going to taxes. That's according the Michigan Petroleum Association.

On a single gallon of gasoline at $4.03 per gallon, you'd pay 18 cents for federal, 27 cents for the state motor tax, and 22 cents for the sales tax.

What is Michigan's gas tax now?

Michigan's gas tax is 27.2 cents per gallon and it went into effect on January 1, 2022. It will remain in place until at least the end of the year.

How is this tax calculated? It's complicated, but we're going to try to explain it as best as we can.

Back in 2015, then-Gov. Rick Snyder signed a law into place that's supposed to help fix the state's roads by boosting funding. Included in the deal was a gas tax increase of 7.3 centers per gallon and a hike in the annual vehicle registration tax.

The annual increase in 2022 is determined based on inflation but can only be increased by 5%, regardless of inflation. As 2021 wound to a close, the United States Department of Labor released data and the state was able to determine that the new rate would increase 3.3%.

Delivery-based businesses left reeling from the pandemic and gas price 1-2 punch

For delivery based businesses that survived the pandemic, a whole new gut wrenching challenge has emerged with global oil price instability.

What state has the highest gas tax?

In 2021, at a total of just over 45 cents combined per gallon, Michigan's gas tax was among the highest in the country at number 9, according to kiplinger.

New Yorkers pay 48 cents per gallon, Washington pays 49 cents, Indiana pays 49 cents, Nevada is at 50 cents, Hawaii is 51 cents, Pennsylvania pays 58 cents, Illinois is at 59 cents, and California is still the highest at 68 cents per gallon.

Even with this year's tax increase in Michigan, we'd still be in the top 10 but far from the highest in the country.

Michigan Economy Consumer Gas Prices