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HB 5479

Streamline sales and use tax: other; taxation of electric fuel under the IFTA; provide for. Amends sec. 4gg of 1933 PA 167 (MCL 205.54gg).

2025-2026 Regular Session Introduced by Pat Outman

The bill would exempt electric fuel sales from the sales tax only when the fuel is taxed under related motor fuel or motor carrier fuel regimes, while creating new mileage- and con

referred to second reading
#energy:electricity #streamlinesalesandusetax:other
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WeVote Research Nonpartisan
Bill Summary · HB 5479

Overview

HB 5479 (2025-2026, Michigan) seeks to streamline the taxation of electric fuel used to propel vehicles by exempting certain sales from the General Sales Tax Act and aligning treatment with existing motor fuel and motor carrier fuel tax regimes. The bill is tie-barred to House Bills 5434 and 5435, and would take effect only if those companion bills are enacted.

Main purpose and intent

  • Create exemptions for electric fuel used to power vehicles from Michigan’s sales tax, provided the electric fuel is taxed under related motor fuel or motor carrier fuel tax regimes.
  • Begin broadening the tax framework to ensure electric propulsion is taxed consistently with traditional fuels (gasoline/diesel) for commercial vehicle use, while avoiding double taxation.

Key provisions and changes

  • General Sales Tax Act exemption:
    • Beginning January 1, 2026, the sale of eligible fuel is exempt from the sales tax if taxed under the motor fuel tax act or the motor carrier fuel tax act.
  • Definitions and scope (Section 4gg):
    • “Electric fuel” is defined as the fuel used to propel a vehicle, as per the Motor Fuel Tax Act definitions.
    • “Eligible fuel” includes motor fuel, alternative fuel, and leaded racing fuel, with specific exclusions (e.g., aviation fuels, residential/heating用途, certain propane limitations, etc.).
    • Adds specific carve-outs to exclude certain fuels from eligibility (aircraft fuels, aviation gasoline, certain heating fuels, etc.).
  • Link to companion bills:
    • HB 5479 is contingent on enactment of HB 5434 (Motor Carrier Fuel Tax Act amendments) and HB 5435 (Motor Fuel Tax Act amendments), which together introduce a new tax for electric fuel used by commercial vehicles and strengthen licensure and administration.
  • Licensure and administration:
    • HB 5435 would require electric fuel commercial users (intrastate carriers operating only in Michigan) to pay a per-month tax based on miles driven and miles-per-gallon equivalent, with a monthly filing and payment deadline.
    • HB 5434 would subject interstate carriers to a similar tax framework beginning January 1, 2028, and would cover reciprocity, record-keeping, and other IFTA-related provisions.
    • Licensure for electric fuel commercial users with a $50 license fee; general licensing/bonding requirements apply.
  • Interaction with existing taxes:
    • The new electric fuel tax would be in lieu of other state taxes on electric fuel use by the state or political subdivisions, except for taxes under the Motor Carrier Fuel Tax Act.
    • The new tax would not apply to electric fuel already taxed under the Motor Carrier Fuel Tax Act.

Who would be affected

  • Commercial motor carriers using electric or plug-in hybrid vehicles:
    • Intrastate carriers operating only within Michigan would face the new monthly tax under HB 5435 if enacted, and require licensing.
    • Interstate carriers would face the quarterly tax under HB 5434 starting in 2028.
  • Electric fuel suppliers and electricity providers used for vehicle propulsion, to the extent they are engaged in commercial vehicle operations subject to the new tax regime.
  • Michigan-based commercial electric vehicles pay a registration surcharge currently, with the bills noting interactions with IRP (International Registration Plan) treatment for interstate activity.

Procedural and timeline aspects

  • Effective date for sales tax exemption: January 1, 2026, if the companion bills are enacted.
  • Tie-bar provisions:
    • HB 5479 cannot take effect unless HB 5433 (IFTA-related provisions), HB 5434 (Motor Carrier Fuel Tax Act amendments), and HB 5435 (Motor Fuel Tax Act amendments) are all enacted.
  • Filing and payment:
    • Electric fuel commercial users would file monthly reports with the Department of Treasury, reporting electricity consumption of qualified vehicles and paying the calculated tax due with the report.
    • Interstate carriers would be subject to quarterly reporting under the companion bill.
  • Fiscal considerations:
    • The fiscal impact on state transportation funds and use tax collections is indeterminate, depending on adoption rates of electric commercial vehicles and miles traveled in Michigan.
    • Revenue would shift toward the Michigan Transportation Fund (MTF) with the new taxes, offset by reductions in use tax collections due to the exemption.

Summary

HB 5479 aims to exempt the sale of electric fuel from the sales tax when the fuel is taxed under related motor fuel or motor carrier fuel tax regimes, while coordinating with a broader set of bills (HB 5434 and HB 5435) to impose new, mileage- and consumption-based taxes on electric fuel used by commercial vehicles. The package establishes licensure for electric fuel commercial users and synchronizes with IFTA and interstate/commercial taxation frameworks. The overall effect is a transitional shift toward taxing electric propulsion for commercial trucking in Michigan, with exemptions contingent on the enactment and alignment of the companion tax bills.

Compiled from official sources — confirm details with the bill’s official record.

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