House Bill 5966 amends Michigan’s Motor Fuel Tax Act to temporarily set the motor fuel tax rate at zero cents per gallon beginning on the bill’s effective date, with that zero rate lasting until the earlier of November 1, 2026, or the date the nationwide average gas price falls below $3.50 as measured by the U.S. Energy Information Administration. During that suspension period, the bill also directs that end users receive the benefit of the tax reduction and prohibits non-end users from retaining any of the reduction. The bill preserves the existing framework for collecting, remitting, and reporting motor fuel taxes, including rules for terminal operators, suppliers, invoices, bills of lading, and publication of tax-rate notices.
The bill also creates a one-time transition tax on stored motor fuel held outside the bulk transfer/terminal system or in excess of 3,000 gallons in storage as of December 31, 2025. That tax is based on the difference between the January 1, 2025 and January 1, 2026 tax rates, and affected holders must inventory the fuel, report it to the department, and pay by February 20, 2026. In addition, the bill extends the zero-rate treatment to alternative fuels by making the alternative fuel tax zero when the motor fuel tax is zero under the new suspension provision.
HB5966 would amend sections 8 and 152 of the Motor Fuel Tax Act, changing the state’s motor fuel tax rate structure and temporarily overriding the normal inflation-adjusted rate increases. It would also affect tax administration by requiring notice of rates, maintaining reporting obligations for terminals and suppliers, and imposing a special inventory-based tax on certain fuel held in storage at the end of 2025. The bill would directly affect fuel suppliers, terminal operators, importers, alternative fuel dealers, end users, and businesses holding large fuel inventories.
No committee transcripts or recorded votes were provided, so there is no direct evidence of legislative debate or formal support/opposition in the available record. Based on the text alone, the bill appears designed to provide near-term tax relief at the pump while preserving collection mechanisms and preventing intermediaries from capturing the benefit. The absence of recorded discussion makes the overall sentiment difficult to gauge beyond the bill’s apparent consumer-relief intent.
The main likely point of contention is the temporary elimination of the motor fuel tax, which would reduce revenue tied to road funding and could raise concerns about fiscal impact and transportation financing. Another potential issue is the bill’s transition tax on large fuel inventories, which could be viewed as necessary to prevent avoidance of the rate change but may be burdensome for fuel holders and businesses with stored product. The requirement that the tax reduction be passed through to end users could also draw scrutiny over enforcement and compliance.