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HB 5434

Transportation: carriers; tax on motor carriers for electric fuel; provide for. Amends title & secs. 1, 2, 2a, 5, 8, 9 & 10 of 1980 PA 119 (MCL 207.211 et seq.). TIE BAR WITH: HB 5433'25, HB 5435'25

2025-2026 Regular Session Introduced by Pat Outman

Imposes a Michigan tax on electricity used to power qualified commercial EVs, calculated by Michigan miles driven, MPGe, and per-gallon fuel tax rate.

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WeVote Research Nonpartisan
Bill Summary · HB 5434

Summary of House Bill 5434 (2025-2026) – Michigan

Primary purpose

  • Establish a tax on electricity used to power large commercial electric vehicles (e.g., semi-trucks) operating on Michigan roads.
  • Create licensure requirements for entities that use electric fuel (electricity) in qualifying commercial vehicles.
  • Tie the tax structure to existing Michigan motor fuel taxes and policy, using miles driven in Michigan and a standard “miles per gallon equivalent” (MPGe) for electric vehicles to compute tax amounts.

Key provisions and changes

  • Connects with two companion bills (HBs 5433 and 5435) in a tie-bar arrangement; none of the three bills can take effect unless all are enacted.
  • Tax mechanism (HB 5434 interacts with HB 5433 and HB 5435):
    • Applies a tax on electricity used to propel qualified commercial motor vehicles (electric fuel) on Michigan public roads.
    • Calculation method:
    • Determine total miles driven in Michigan by the carrier’s electric vehicles during a given period.
    • Divide by the carrier’s average MPGe (the energy efficiency measure for electric vehicles).
    • Multiply by the per-gallon motor fuel tax rate (the existing tax rate for gasoline/diesel).
  • Applicability:
    • Electric fuel commercial user: intrastate motor carriers operating only inside Michigan.
    • Vehicles must be “qualified commercial motor vehicles” (similar criteria to those used for motor carrier fuel taxes):
    • Used to transport persons or property.
    • Meet specific weight/axle thresholds (three or more axles; or two axles with a gross vehicle weight above 26,000 pounds; or combos exceeding 26,000 pounds).
    • Excludes certain vehicles (e.g., recreational vehicles; farm-use vehicles under specified exemptions; certain school buses and public transit buses are excluded in defined ways).
    • Includes both electric vehicles (EVs) and plug-in hybrids in the MPGe framework (the MPGe standard is used to convert electricity use into a gallon-equivalent).
  • Payment and reporting:
    • Monthly reporting requirement: electric fuel commercial users must file a report with the Department of Treasury by the 20th of each month detailing electricity consumption for the prior month and other department requirements.
    • Tax due must be paid at the time of filing the report.
  • Licensure:
    • Prohibits acting as an electric fuel commercial user in Michigan without a Treasury license.
    • License application requires basic identifying information and places of business; a $50 license fee applies.
    • Licensees would be subject to general licensing and bonding requirements of the act.
  • Interaction with other taxes:
    • The electric-fuel tax would be in lieu of all other taxes on the use of electric fuel by the state or political subdivisions, except for taxes imposed under the Motor Carrier Fuel Tax Act (the companion bill HB 5434).
    • The electric-fuel tax would not apply to electricity taxed under the Motor Carrier Fuel Tax Act.
    • Use Tax Act (HB 5433) and General Sales Tax Act (via HB 5479) would provide exemptions for electric fuel use if it is taxed under either HB 5434 or HB 5435.
  • Effective date:
    • The broader package specifies that the measures would take effect on January 1, 2028, contingent on the passage of all three tied bills (5433, 5434, and 5435).

Who would be affected

  • Large commercial motor carriers that operate electric-powered vehicles within Michigan (intrastate carriers):
    • Those using electric or plug-in hybrid commercial vehicles meeting the defined qualification criteria.
    • They would face new monthly reporting obligations and a new tax based on miles driven in Michigan and MPGe.
  • Electric fuel commercial users:
    • Entities that use electricity to power qualifying commercial vehicles on Michigan roads would need to obtain a Treasury license (cost: $50) and comply with licensing requirements.
  • State and local finance:
    • Expected impact on Michigan Transportation Fund (MTF) revenues (increase) and on state use tax collections (unclear, due to exemptions for taxed electric-fuel use).

Procedural and timeline aspects

  • Legislative status:
    • HB 5433, HB 5434, and HB 5435 are tie-barred together.
    • As of the latest information, HB 5434 has been referred to committee, with revisions in committee (H-2) noted; 5433 and 5435 are tied to 5434 for enactment and effective date.
  • Fiscal note (House Fiscal Agency):
    • Describes an indeterminate net fiscal impact; increases to MTF revenues are possible, offset by uncertain reductions in use tax collections due to exemptions.
    • Initial fiscal effects depend on adoption rates of electric commercial vehicles and actual miles traveled in Michigan.
  • Related materials:
    • Supporting legislative analysis explains MPGe concepts and the interaction with IFTA (International Fuel Tax Agreement), license requirements, and the IRP (International Registration Plan) context.

If you’d like, I can break down the MPGe calculation assumptions, compare to existing motor fuel tax mechanics, or provide a side-by-side with the related HB 5433 and HB 5435 analyses.

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

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