LANSING, Mich. (Michigan Capitol) — Michigan is preparing a pilot program that would test charging motorists based on how many miles they drive, a significant step away from the state's traditional reliance on fuel taxes to fund its road system.
The Michigan Department of Transportation has selected CDM Smith for a $6.3 million contract to conduct the feasibility study and pilot, which is expected to begin a public education campaign this year, followed by legislative outreach in January and a six-month trial run with approximately 1,000 participants starting in 2027.
The effort is mandated under Public Act 22 of 2025, which required MDOT to begin the road usage charge study and pilot no later than December 31, 2025. The total project is capped at $7.65 million and was required to create a Technical Advisory Committee to help develop and evaluate different approaches to mileage-based road funding.
A Massive Funding Gap Drives the Push
The push to explore a road usage charge is happening against the backdrop of a daunting long-term financial challenge. Under the draft Michigan Mobility 2050 financial plan, MDOT estimates the state will face approximately $251.4 billion in transportation needs between 2026 and 2050, but only about $137.8 billion in projected revenue to meet those needs.
That leaves an estimated $113.6 billion funding gap, meaning projected revenues would cover only about 54.8 percent of identified transportation needs. Road pavement accounts for the largest share of that shortfall. MDOT estimates roughly $88.8 billion in pavement needs on the state trunkline system, compared with only about $33.2 billion in projected revenue, creating a pavement gap of approximately $55.6 billion on state-controlled roads alone.
A Concrete Formula Takes Shape in the Legislature
While the pilot remains in its planning stages, lawmakers have already introduced legislation showing what a Michigan per-mile formula might look like. House Bill 5765, introduced in March and currently before the House Committee on Government Operations, proposes creating a road usage charge for certain electric and hybrid vehicles.
The bill defines the road usage charge as 1/25 of Michigan's gasoline tax per gallon for every mile traveled. With Michigan's gasoline tax currently at 52.4 cents per gallon, that formula would equal approximately 2.096 cents per mile.
At that rate, a driver traveling 10,000 miles per year would generate approximately $209.60 in road usage charges. At 15,000 miles, the charge would rise to approximately $314.40. The bill has not passed, and those figures are not an adopted statewide rate, but they provide a concrete example of how lawmakers could tie a future mileage charge directly to the existing fuel tax.
Key Questions Remain
Several important questions have not yet been resolved publicly. Those include how many motorists will participate in the pilot, which vehicles will qualify, how mileage will be reported, whether participants will have multiple reporting options, and whether location data will be collected.
MDOT has not announced one mandatory technology for collecting mileage. Previous state research has examined several possibilities, including odometer reporting, smartphone applications, devices plugged into a vehicle's diagnostic port, and direct vehicle telematics. Michigan has already conducted a demonstration using direct vehicle telematics, where mileage information is collected from connected vehicles rather than relying solely on motorists to manually report odometers.
What Comes Next
The RUC Technical Advisory Committee is scheduled to meet on September 28 from 1 p.m. to 2:30 p.m. at the MDOT Office of Aeronautics in Lansing. Additional committee meetings are expected later this fall as MDOT and CDM Smith develop the study and pilot.
The 2025 law directs that the study and pilot program be completed by December 31, 2026, with MDOT submitting a report of its findings to the governor, legislative appropriations committees, and the public. However, the draft Michigan Mobility 2050 plan describes RUC activity as continuing through 2026 and 2027, creating an apparent timing wrinkle that may need to be addressed.
Importantly, no permanent statewide mileage tax has been approved. Any such system would require additional legislation. For now, Michigan is spending millions of public dollars to determine whether a per-mile approach is practical, what technology could be used, what motorists think of it, and how the state could administer it.
Michigan currently relies heavily on fuel taxes and vehicle registration fees to support transportation infrastructure. MDOT argues that increasing vehicle fuel efficiency and the transition toward electric vehicles weaken the long-term relationship between gallons of gasoline sold and road usage, making the case for exploring alternative funding mechanisms.
The debate over whether motorists could someday pay for roads by the mile instead of by the gallon is moving well beyond the theoretical stage in Michigan.