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HB 5433

Use tax: definitions; definition of qualified commercial motor vehicle; modify. Amends secs. 2 & 4a of 1937 PA 94 (MCL 205.92 & 205.94a). TIE BAR WITH: HB 5434'25, HB 5435'25

2025-2026 Regular Session Introduced by Pat Outman

Imposes an MPGe-based tax on electricity used by large commercial vehicles in Michigan, tying it to miles driven and effective only if HB 5433, 5434, and 5435 pass together.

referred to second reading
#usetax:definitions
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WeVote Research Nonpartisan
Bill Summary · HB 5433

Overview

House Bill 5433 (2025-2026, Michigan) is a package of tie-barred bills aimed at imposing a tax on electricity used to power large commercial electric vehicles (e.g., heavy trucks) operating on Michigan roads. The core concept is to tax electric fuel (electricity) for qualified commercial motor vehicles in a manner similar to the existing motor fuel tax, with the tax base tied to miles driven in Michigan and the vehicle’s miles-per-gallon-equivalent (MPGe). The package includes HB 5434 (amending the Motor Carrier Fuel Tax Act), HB 5435 (amending the Motor Fuel Tax Act to create an electric-fuel tax for intrastate carriers), and HB 5479 (general sales/use tax exemption related to electric fuel). All four bills are linked and take effect only if enacted together.

Main purpose and intent

  • Establish a tax on electricity used to propel large commercial motor vehicles operating on Michigan roads, treating electric fuel similarly to gasoline/diesel fuel for tax purposes.
  • Ensure intrastate carriers (operating only within Michigan) and interstate carriers are taxed appropriately, with separate licensing requirements for electric-fuel commercial users.
  • Phase in and harmonize with existing state tax structures (Motor Fuel Tax Act, Motor Carrier Fuel Tax Act), while exempting electric-fuel use that is already taxed under those acts.

Key provisions and changes

  • Use Tax Act ( HB 5433, amendments to 1937 PA 94 ):

    • Defines terms relevant to the use tax and clarifies exemptions related to electric fuel when taxed under HB 5434/HB 5435.
    • Exempts electric-fuel use from use tax if taxed under either the Motor Fuel Tax Act or the Motor Carrier Fuel Tax Act.
    • Tie-bar requires HB 5434 and HB 5435 (and HB 5479) to enact together for any effect.

  • Motor Carrier Fuel Tax Act ( HB 5434 ):

    • Creates an electric-fuel tax on electric fuel used by interstate carriers (operating both inside and outside Michigan) starting January 1, 2028.
    • Defines MPGe-based calculation methodology: tax = (total Michigan miles driven by EVs / average MPGe) × per-gallon motor-fuel tax rate.
    • Adds electric-fuel provisions to IFTA reciprocity, leased vehicles, and record-keeping.
    • Requires licensing for electric-fuel commercial users; $50 license fee.

  • Motor Fuel Tax Act ( HB 5435 ):

    • Applies an electric-fuel tax to intrastate carriers (vehicles operating only in Michigan) starting January 1, 2028.
    • Tax calculation mirrors HB 5434 (monthly/periodic reporting, MPGe-based method, and per-gallon rate).
    • Requires monthly reporting and payment by electric-fuel commercial users; $50 license requirement.
    • Exempts electric-fuel use from other taxes on electric fuel.

  • General Sales/Use Tax Act ( HB 5479 ):

    • Extends exemptions so that the sale of electric fuel for propulsion is exempt if taxed under HB 5434 or HB 5435.

Affected parties and scope

  • Large commercial motor vehicle operators (heavy trucks, 3+ axles or 2 axles with weight thresholds, including certain combinations) using electricity as a fuel source.
  • Intrastate carriers (Michigan-only operations) and interstate carriers (operating within and outside Michigan) with qualified electric vehicles.
  • Electric-fuel commercial users would need to obtain a Department of Treasury license and comply with reporting and payment requirements.
  • The Michigan Transportation Fund (MTF) and state use tax collections could see shifts in revenue, with potential increases in MTF and reductions in use taxes, depending on adoption and mileage data.

Procedural and timeline notes

  • Effective only if HB 5433, HB 5434, and HB 5435 are enacted together (tie-bar).
  • HB 5435/HB 5434 specify a 2028 start date for the electric-fuel tax (calendar-year basis) with monthly/quarterly reporting and payments, respectively (specific schedules differ by intrastate vs. interstate provisions).
  • Licensing requirements apply to electric-fuel commercial users, with a $50 license fee.

Fiscal impact (as analyzed)

  • Overall, indeterminate impact on state transportation funds and use tax collections.
  • Anticipated growth in revenue from increased electric-vehicle adoption, offset by exemptions and the nuanced treatment of electric-fuel use.
  • Early estimates rely on current counts of Michigan-based commercial EVs and future mileage/usage patterns.

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

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