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HB 4182

Use tax: exemptions; motor fuel sales; exempt. Amends sec. 21 of 1937 PA 94 (MCL 205.111) & adds sec. 4gg. TIE BAR WITH: HB 4183'25, HB 4181'25, HB 4180'25, HB 4185'25, HB 4186'25, HB 4187'25, HB 4184'25

2025-2026 Regular Session Introduced by Greg Alexander and 29 co-sponsors

Exempts eligible fuels from Michigan use tax starting Jan 1, 2026 (motor, alternative, leaded racing); SAF deposits offset revenue loss to education funds; excludes aviation/heating fuels.

assigned PA 19'25 with immediate effect
#usetax:exemptions
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WeVote Research Nonpartisan
Bill Summary · HB 4182

Summary — HB 4182 (Use Tax Act amendments) — Public Act 19 of 2025

Status: Enacted (Public Act 19 of 2025); approved by Governor Oct 7, 2025. The act took immediate effect on signature; the substantive use-tax exemption takes effect Jan. 1, 2026.

Purpose / intent

HB 4182 amends Michigan’s Use Tax Act to exempt certain fuels from the state use tax. The change is part of a larger, tied “road funding” package of bills that also address sales tax treatment of fuel, the motor fuel excise rate, and transportation funding formulas.

Key provisions

  • Adds a new section (4gg) to the Use Tax Act creating an exemption: beginning Jan. 1, 2026, “eligible fuel” is exempt from Michigan use tax.
  • Amends Section 21 (distribution provisions) to:
    • Require the Department of Treasury to identify and deposit into the State School Aid Fund (SAF) amounts equal to revenue lost to the SAF as a result of the new exemption (Sec. 21(3)(c)).
    • Retain and clarify existing distribution and reconciliation rules for the 2% use-tax collections on aviation fuel (deposits to the State Aeronautics Fund and Qualified Airport Fund) and require annual reconciliation reporting to qualified airports.
    • Continue other specified deposits (e.g., $75 million to a local government reimbursement fund beginning FY ending Sept. 30, 2024).
  • Defines (within Sec. 4gg / Sec. 21) terms used for the exemption and deposits.

Definition of “eligible fuel” and exclusions

  • “Eligible fuel” (as enacted) means: motor fuel, alternative fuel, and leaded racing fuel.
  • Exclusions (i.e., fuels not covered by the new exemption) include:
    • Motor fuel sold for use in aircraft where the purchaser has paid the aeronautics privilege tax and (if required) is registered under the Motor Fuel Tax Act;
    • Aviation fuel on which the aeronautics privilege tax is due;
    • Motor fuel identified on invoices/shipping papers and sold as aviation fuel when the aeronautics privilege tax has been paid;
    • Motor or alternative fuel sold for residential, commercial, or industrial heating, cooling, or ventilation uses (including items already exempt under the 2% use-tax constitutional rate);
    • Liquefied petroleum gas unless it falls within the Motor Fuel Tax Act’s definition of “use”/“used.”

Funds and likely fiscal effects

  • The bill exempts (from use tax) large categories of fuel that previously generated use-tax revenue. To protect education funding, Sec. 21 requires deposits into the SAF equal to SAF revenue lost because of the exemption.
  • The act interacts with other bills in the package (e.g., sales-tax exemptions for fuel, a motor-fuel excise increase, and redirected corporate tax receipts) intended to reallocate revenue toward transportation funds; overall fiscal impacts were analyzed as part of the package and vary by fund.

Who is affected

  • Retail purchasers and users of motor and alternative fuels (including entities holding fuel in storage) — reduced use-tax liability beginning Jan. 1, 2026.
  • Airports and aviation fuel sellers/operators — exemptions for some aviation fuel are excluded; existing aeronautics tax and distributions remain in place and are reconciled annually.
  • State funds: General Fund, School Aid Fund, Aeronautics Fund, Qualified Airport Fund, and transportation funds (via related, tie‑barred legislation).

Timing & procedural notes

  • HB 4182 was tie-barred with other bills in the broader road funding package (e.g., HB 4180, 4181, 4183). The Legislature passed substitute language; the enacted provision specifying the exemption start date is Jan. 1, 2026. The act was filed with the Secretary of State Oct. 7, 2025 (effective immediately), with the statutory exemption effective Jan. 1, 2026.

If you want, I can extract the exact statutory text changes (MCL citations) or produce a side-by-side showing of fuels included versus excluded for practical compliance guidance.

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

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