LANSING, Mich. — The Michigan Department of Transportation is preparing to test a pay-per-mile system that could one day replace some or all of the state's fuel tax, as electric vehicles and improved fuel efficiency chip away at the revenue the state depends on to build and maintain its roads, bridges and tunnels.
The six-month pilot program is set to launch in February 2027 and will involve roughly 1,000 volunteer drivers. The project was funded at a cost of $7.65 million in the fiscal year 2025-26 state budget, which Democratic Governor Gretchen Whitmer signed on Oct. 7, 2025. Under the legislation, known as Public Act 22 of 2025, the project may be carried out using state employees, contracts with service providers, or both.
MDOT has contracted CDM Smith, a consulting firm, to help transition the state's primary road funding formula. Jennifer Roberts, the road user charge discipline lead at CDM Smith, said the pilot is expected to last six months and that participants will test several methods of reporting mileage, including self-reported odometer readings, smartphone apps, plug-in devices and data transmitted from a vehicle's built-in telematics system.
It is not yet clear how participants will report their data or how much they would pay per mile.
The study was first commissioned in 2024. MDOT said the purpose of the pilot is to evaluate mileage-based revenue collection as an alternative to the fuel tax system.
Michigan currently taxes drivers at the pump. Beginning this year, the state moved to a combined motor fuel tax of 52.4 cents per gallon, replacing a previous 31-cent motor fuel tax plus a 6 percent sales tax. Of that revenue, 34.4 percent goes to state highways, 34.4 percent to county roads, 19.2 percent to cities and villages, 9.8 percent to the public transit fund and 2 percent to the Recreation Improvement Account.
The push for a change is driven by a fleet that is using less gasoline. Roberts said the problem was initially framed as an electric vehicle issue, but the data shows that improvements in fuel economy are the larger factor.
"It started out as an EV problem; I think that was an easy place to point. But I think the data and research has shown us that improvements in fuel economy are also a big driver," Roberts said in an MDOT podcast. "The bottom line is people are buying less gas. That is a good thing for our environment, but that doesn't work for how we fund transportation today."
Michigan already collects some of the highest electric and hybrid vehicle registration fees in the nation. The EV fee is $267 for passenger vehicles and $367 for trucks and buses, charged in addition to regular registration fees. Plug-in hybrid vehicles pay $113 for passenger vehicles and $183 for trucks and buses.
Four states currently operate road user charge programs: Oregon, Utah, Virginia and Hawaii. Vermont is expected to become the fifth in January 2027. Oregon's OReGO program, for example, charges participating passenger vehicles two cents per mile.
The program has raised privacy concerns among some Michigan residents, who are already uneasy about automated license-plate reader cameras. MDOT says the pilot will examine data privacy and security and will conduct public outreach. Some of the collection methods could potentially provide location information, not just a mileage total.
The state has also signaled fairness questions, particularly for high-mileage drivers such as truckers and rural residents. MDOT said the pilot will focus on passenger vehicles and will not include the trucking industry for now.
MDOT stressed that Michigan has not actually adopted a pay-per-mile system. Doing so would require a separate act of the Legislature, giving voters the chance to weigh in on lawmakers who would ultimately decide whether the state moves forward with the change.