Michigan Tests Pay-Per-Mile System As EVs Cut Into Gas Tax Revenue

Michigan is spending up to $7.65 million on a pilot program to test a mileage-based alternative to its gas tax.

The pilot will launch in February 2027, run for six months, and enroll 1,000 volunteers, Jennifer Roberts, the road usage charge (RUC) lead at consultant CDM Smith, told FOX 2 Detroit. Democratic Michigan Gov. Gretchen Whitmer proposed the program, and lawmakers approved the spending cap in the 2025 budget, according to the public act.

Whitmer leaves office Jan. 1, a month before the pilot is set to begin.

The Michigan Department of Transportation (MDOT) states on its website that participation will be voluntary and “no changes are planned at this time.” The department adds that lawmakers would have to pass new legislation before the state could impose a permanent mileage charge.

James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, told the Daily Caller News Foundation that moving from taxpayer financing to direct user fees would be better for state residents, but only if the charge replaces the fuel tax.

“Some people within the road lobby have wanted it to be an additional revenue flow rather than a replacement,” Hohman said. “But it’s not a user fee if it’s just an extra charge, and it would not improve efficiency and fairness if it’s just another way to collect revenue.”

A mileage charge would apply to vehicles registered in Michigan, and “one of the difficulties” of the model is charging out-of-state drivers and people who regularly cross state or international borders, according to FOX 2 Detroit. Out-of-state drivers currently pay Michigan’s fuel tax when they buy gasoline in the state.

The MDOT study “does model and pitch it as a replacement for fuel taxes,” Hohman told the DCNF. Charging out-of-state drivers is “something they’d like to do,” but the Legislature would have to decide how, Hohman said.

MDOT and Whitmer’s office did not immediately respond to the DCNF’s requests for comment.