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Notice Concerning Inflation Adjusted Fuel Tax Act and Applicable to IFTA Motor Carriers That Will Take Effect on January 1, 2023
Issued: December 1, 2022
As required by 2015 PA 176, the Department issues this notice to announce the inflation-adjusted tax rates imposed on each gallon (or gallon-equivalent) of motor fuel and alternative fuel under the Motor Fuel Tax Act ("MFTA"), MCL 207.1001 et seq, and the Motor Carrier Fuel Tax Act ("MCFTA"), MCL 207.211 et seq, that will be effective January 1, 2023.
Under subsection 8(1)(c) of the MFTA, MCL 207.1008(1)(c), the Department must annually update the tax rates applicable to each gallon of motor fuel by an inflation adjustment equal to the lesser of: 5% or the "inflation rate" (as defined in MCL 207.1003(l)), rounded to the nearest 1/10 of a cent.
Based on data released through October 13, 2022, by the United States Department of Labor, the Department has determined that the inflation rate applicable to the MFTA tax rates effective January 1, 2023, is 7.9%. Accordingly, the inflation-adjusted tax rate imposed on motor fuel under the MFTA for the tax period beginning January 1, 2023, through December 31, 2023, is 28.6 cents-per-gallon (27.2 cents per gallon x 1.05 = 28.6 cents per gallon).
Because the MFTA tax rate applicable to "alternative fuel" must equal the tax rate imposed on motor fuel, the tax rate applicable to alternative fuel under the MFTA is also 28.6 cents-per-gallon (or per gallon equivalent) for the tax period beginning January 1, 2023, through December 31, 2023.Similarly, subsection 2(6) of the MCFTA, MCL 207.212(6), requires that the tax rates imposed under the MCFTA on each gallon or gallon equivalent of motor fuel and alternative fuel, as applicable, consumed on Michigan public roads or highways must equal the MFTA tax rates imposed on motor fuel and alternative fuel. Therefore, the fuel tax rates under MCL 207.212(6) for motor carriers licensed or otherwise subject to the International Fuel Tax Agreement is 28.6 cents per gallon (or gallon equivalent) of motor fuel and alternative fuel for the tax period beginning January 1, 2023, through December 31, 2023.