Michigan Treasury Issues Updated Fuel Tax Guidance, Sunsets Prepaid Sales Tax

The Michigan Department of Treasury has issued updated guidance detailing fuel tax changes enacted under Public Acts 17–20 of 2025. Under PA 17, the prepaid sales tax on motor fuel will cease for purchases made on or after Jan. 1, 2026. In addition, PAs 17 and 19 provide that the sale, use, storage, or consumption of “eligible fuel”—which generally includes gasoline and diesel fuel unless specifically excluded—will be exempt from Michigan sales and use tax. Separately, PA 20 establishes a new inflation-adjusted motor fuel tax rate of $0.524 per gallon. The notice also addresses a one-time floor stock (inventory) tax ...