Michigan EV fees spike under road funding deal, now nation’s highest

Michigan’s electric and plug-in hybrid vehicle owners will see a big jump in how much it costs to renew their registrations this year
The change is a byproduct of Michigan’s recently signed road funding package, which is expected to eventually generate $1.8B annually for repairs and upkeep
Consensus is split on whether the jump in price is punitive to EV and plug-in hybrid owners, or if it’s requiring drivers to pay their fair share for road repairs

LANSING — Michigan’s roughly 122,000 electric and plug-in hybrid vehicle owners are in for some sticker shock the next time they renew their plates.

Their annual vehicle registration fees have skyrocketed to the nation’s highest in 2026, the result of a road funding package passed last fall that had little financial impact on gas-powered vehicle owners.

While critics of the EV fee hike call it an unfair tax on a user group that’s already paying more to maintain Michigan’s roughly 120,000 miles of paved public roadways, proponents contend it fairly charges EV drivers for their use of the roads.

“The goal was not to nick or punish anyone. We don’t want an undue burden on anybody,” state Rep. Tom Kunse, R-Clare, told Bridge Michigan on Tuesday. “But, if we look at the math, I think it’s right where it should be.”

Under the formula triggered by last year’s road funding deal, annual registration fees for light-duty EVs are increasing from $160 to $267, while plug-in hybrid fees are going from $60 to $113. That’s on top of the state’s base registration fees, which apply to all vehicles and vary depending on the vehicle’s value.

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The fee hike makes Michigan the most expensive among 40 states that charge a special EV registration fee, according to national databases maintained by the National Conference of State Legislatures and the Tax Foundation. Hawaii and South Dakota have the lowest fees at $50 per vehicle, while the national average is a little over $100.

“The thinking in the EV community is that this is way beyond what EV drivers should be made to pay,” said Karl Bloss, a longtime EV owner in Muskegon.

But efforts to undo the change are unlikely to gain traction in the Legislature.

How we got here

Like other states, Michigan has long used gas taxes and vehicle registration fees to fund its road system. But lawmakers and advocates have long complained that it’s not generating enough money, leaving Michigan with among the most pothole-riddled roads in the nation.

Last fall, lawmakers struck a funding deal that is expected to eventually generate more than $1.8 billion a year for roads, including about $1 billion this fiscal year. The deal relies in part on abolishing Michigan’s 6% sales tax on gas – which funds things other than roads – while raising Michigan’s fuel tax from 31 cents to 52.4 cents a gallon.

While internal combustion engine drivers will see virtually no change in their price at the pump, the newly enacted plan triggered a 2015 law that ties EV registration fees to the cost of the gas tax, resulting in the spike in EV fees.

Michigan lawmakers in 2015 authorized a special registration surcharge for EVs and plug-in hybrids that took effect in 2017. It’s meant to ensure EV drivers help pay for road upkeep despite the fact that they don’t buy gas.

The law triggers an increase of $5 for EVs and $2.50 for hybrids for every cent that Michigan’s gas tax rises above 19 cents.

The EV fee hikes are expected to generate about $12 million a year in new revenue — a small fraction of the larger road funding deal signed into law by Gov. Gretchen Whitmer that also includes more than $400 million a year from a new wholesale marijuana tax.

But EV advocates are crying foul, arguing the fee hike is unfair. The nonprofit Ecology Center estimates that Michigan EV owners were already paying about $20 more than gas-powered vehicle owners annually in transportation-related taxes.

Proponents of the fee hike dispute that math.

“We still don’t even think, with this increase, that they’re still paying their fair share,” said Lance Binoniemi, vice president of government affairs for the Michigan Infrastructure & Transportation Association.

What next?

Sen. Sam Singh, D-East Lansing, last fall proposed a bill aiming to lessen the blow to EV drivers by lowering the fee increase to a respective $1.88 and 94 cents for every penny increase to the gas tax.

That would have meant a $63 fee hike for EV owners this year, as opposed to $107 under the enacted road funding deal, and a $32 fee hike for plug-in hybrid owners, down from $53.

The Senate Appropriations Committee held a hearing on the bill in November but did not vote on it. Even if approved by the full Senate this year, House Speaker Matt Hall has made clear he does not plan to take up the EV fee reduction proposal.

“I negotiated this historic roads deal with the governor, and the Legislature, including Senator Singh, voted for it,” Hall, R-Richland Township, said Tuesday in a statement provided to Bridge. “This deal, one that many said couldn’t be done, repairs our local roads and gives stability to road funding for the future. His bill would be going back on the deal we all agreed to, and that’s not how deals work.”

Singh, however, said this week he thinks EV fees are still a topic worth discussing, noting that lawmakers stressed throughout the road funding conversation that any change to sales tax at the pump would be revenue neutral for drivers.

“We had obviously tried to bring the issue up during negotiations,” he said, referring to his own legislation. “I think, unfortunately, there were so many moving pieces that this is one of the pieces that got left behind.”

Although the road funding deal represents an historic investment in Michigan’s roads, some say it’s still not enough to fix them.

Michigan has the 40th worst-maintained roads in the nation, according to the nonprofit Citizens Research Council. Initial plans from both Whitmer and House Republicans had called for about $3 billion a year to fix them. The road-building lobby, meanwhile, contends Michigan needs $3.9 billion more a year.

“We’ve continued to hear over decades that road funding is a major priority for the Legislature,” Binoniemi said. “We’ve heard many different legislatures say that, but we’ve never come up with a full, long-term, sustainable solution that actually solves the problem.”

Long-term, both EV and infrastructure advocates say they want a more equitable road funding formula that charges drivers based on road usage, rather than the type of vehicle they drive.

“To be clear, there needed to be a road funding fix,” said Sophia Schuster, policy principal with the Michigan Energy Innovation Business Council, but the end result of this one is “not fair.”

Last year, lawmakers directed the Michigan Department of Transportation to study the concept of a usage charge in order to ensure stable road funding as more fuel-efficient vehicles and EVs cut into gas tax revenue.

Other states such as Oregon and Utah have experimented with a mileage tax, but critics have raised privacy concerns about GPS data collection devices used to track miles driven.

A flurry of changes for EV drivers

Bloss, the EV driver from Muskegon, predicted the fee hike won’t drive any EV owners back into gas cars. But it might prompt EV-curious buyers to stick with gas for a little longer.

Man on motorcycle — Karl Bloss made the switch to EV driving several years ago. While he sees Michigan’s price hike on EV registrations as unfair, he won’t be switching back to gas anytime soon. (David Ruck for Bridge Michigan)

From his perspective, the benefits of EV ownership still outweigh the costs. Refueling his EV costs less than half the price-per-mile of gas, he has no need for scheduled oil changes or belt replacements, and with at-home charging, “I never have to stand in the slush and fill up my car in the middle of a blizzard.”

The state fee hike for EV owners joins a flurry of other recent policy changes that have made EV ownership more expensive, contributing to lackluster EV adoption.

EVs account for 1.3% of the roughly 8 million vehicle registrations in Michigan, according to the Department of State. That’s below the national average of about 2%.

While the 102,549 EVs registered in Michigan today represent a marked increase from 20,000 in 2022, the state is not on pace to meet Whitmer’s goal of putting 2 million EVs on Michigan roads by 2030. There are another 19,226 plug-in hybrids registered in the state, according to Secretary of State data.

Whitmer’s office declined to comment on the new EV registration fee hike.

Beyond the state fee increase, President Donald Trump has canceled the $7,500 federal tax credit for new EV purchases put in place by his predecessor, former President Joe Biden, revoked grants and incentives for EV manufacturing and delayed disbursements from a multi-billion-dollar fund for EV charging stations along the nation’s major highways.

Those policy shifts are expected to slow consumer uptake of EVs. Indeed, both Ford Motor Co. and General Motors have downscaled their EV ambitions in the past year and reprioritized gas and hybrid manufacturing.

Experts have said they expect the EV transition to continue, albeit more slowly, as buyers are drawn to the anticipated release of cheaper EV models that, when combined with lower maintenance and fueling costs, are expected to make EVs more affordable than gas-powered cars.