Michigan will recruit 1,000 volunteers for a six-month road-usage-charge pilot beginning in February 2027, testing mileage-based alternatives to the gas tax amid concerns over privacy, rural drivers and declining fuel-tax revenue from electric and increasingly efficient vehicles.
By yourNEWS Media Newsroom.
Michigan is preparing to test a pay-per-mile system with 1,000 volunteer drivers beginning in February 2027 as state officials examine whether mileage-based charges could eventually replace some or all of the fuel taxes used to finance roads and bridges, according to a report by the Daily Caller News Foundation.
The six-month pilot is part of a broader road usage charge, or RUC, study authorized by lawmakers after Gov. Gretchen Whitmer proposed funding for the initiative. State law caps the combined study and pilot at $7.65 million, while the Michigan Department of Transportation says the purpose is to evaluate mileage-based revenue collection “as an alternative to the fuel tax system.”
Jennifer Roberts, road usage charge lead for consultant CDM Smith, told FOX 2 Detroit that the pilot is expected to launch in February, last six months and involve 1,000 volunteers.
For now, MDOT stresses that Michigan has not adopted a permanent mileage tax. Participation in the pilot will be voluntary, and the department says “no changes are planned at this time”. Any statewide RUC would require new legislation.
That distinction is significant because the experiment will evaluate several ways of calculating mileage rather than immediately imposing a new statewide tax.
Minutes from MDOT’s Aug. 24 technical advisory committee meeting show that passenger vehicles participating in the pilot may report mileage through odometer readings, factory-installed vehicle telematics, a plug-in device or a smartphone application. The study will evaluate data accuracy, security, privacy, participant experience, fairness and the ability to operate such a system on a larger scale.
John Peracchio, a member of the committee and State Transportation Commission appointee, said in a February interview that one possibility is to “leverage the embedded telematics” already installed in vehicles.
“GPS can get you within two meters reliably today,” Peracchio said.
Another possibility, he said, is “to leverage a smart device like an iPhone, and to marry that data up with information about your vehicle.”
Those options are already generating privacy questions.
An MDOT survey of 19,160 Michigan residents found 44% were not confident a mileage system would result in improved roads, while more than 30% expressed concerns about privacy and how mileage would be measured. Seventeen percent said they would refuse to provide mileage information. Only 25% identified a mileage charge as the fairest way to fund transportation, compared with 31% who preferred using General Fund money and 23% who favored the gas tax.
The state has contracted with CDM Smith Michigan for much of the work. The State Administrative Board approved the contract on June 2 for $6,307,178, covering project management, planning, procurement, statewide public education, legislative engagement, the operational pilot and revenue modeling. The contract runs through Dec. 31, 2027.
The statutory $7.65 million figure is therefore the maximum authorized for the overall RUC study and pilot, not the price of enrolling 1,000 drivers alone.
The advisory committee is scheduled to meet again Sept. 28 in Lansing as officials continue working through questions involving technology, rates, privacy, geography and legislative options.
One major challenge is how to distinguish miles driven inside Michigan from those driven elsewhere. Fuel taxes are collected when motorists purchase gasoline in the state, including from out-of-state visitors. A mileage system applied to Michigan-registered vehicles creates more complicated questions for residents who routinely drive into Ohio, Indiana, Wisconsin or Canada and for nonresidents using Michigan roads.
Peracchio has compared a mileage charge to tolling without “the ugly gantries, toll tags, tag readers and video capture.”
He has also said a statewide system would take years to build even if lawmakers eventually approved one.
“If we started tomorrow, it would probably take us a decade to roll this out effectively,” Peracchio said.
Asked what Michigan motorists might ultimately be charged per mile, he said, “We’re nowhere near figuring that out.”
Rural drivers are another focus of the debate because they often travel greater distances for work, school, medical care and everyday necessities.
“It’s going to kill me. I put on a lot of miles,” mid-Michigan resident Aaron Wesener told WNEM.
CDM Smith has argued that claims mileage charges necessarily disadvantage rural motorists can be misleading. On its website, the contractor calls the rural-driver concern a “myth”, arguing that rural households often drive older, less fuel-efficient vehicles and could in some circumstances pay less under a flat per-mile fee replacing the fuel tax.
Peracchio said policymakers could also consider whether rural and lower-income motorists should receive different rates, but those decisions would ultimately belong to lawmakers.
Fiscal pressure from electric vehicles is one reason states are studying alternatives.
An earlier analysis reported by Bridge Michigan estimated that electric vehicles resulted in about $50 million in foregone Michigan gas-tax revenue from 2019 through 2021. An Anderson Economic Group study estimated the annual gap could approach $95 million by 2030 if electric vehicles account for 25% of new vehicle sales.
Michigan already charges EV owners additional registration fees. The current supplemental fee is $267 for an electric passenger vehicle and $113 for a plug-in hybrid, on top of standard registration charges.
A separate legislative proposal introduced in March would address EVs and hybrids without imposing a mileage charge on all vehicles.
Republican Rep. Jennifer Wortz’s House Bill 5765, which has bipartisan co-sponsors, would allow affected vehicle owners to choose between a flat annual tax and a mileage-based option. The bill uses odometer information and a formula tied to Michigan’s fuel tax, producing a per-mile charge of roughly 2.1 cents under current assumptions. Its legislative record shows it was referred to the House Government Operations Committee on March 19 and has not advanced beyond committee.
Michigan is not alone in examining the issue.
Hawaii began charging EV owners either $8 per 1,000 miles, capped at $50 annually, or a flat $50 fee in July 2025. Under Hawaii law, the per-mile option becomes mandatory for EVs in 2028, and the state is planning for possible expansion to all light-duty vehicles by 2033. The mileage calculation relies largely on odometer readings collected during annual safety inspections, according to the Hawaii Department of Transportation. Those dates apply to Hawaii, not Michigan.
Michigan’s fuel-tax structure also changed substantially this year. The state increased its motor-fuel excise tax from 31 cents to 52.4 cents per gallon on Jan. 1 while simultaneously eliminating the 6% sales and use tax on fuel. The Michigan Treasury Department describes the restructuring as a tax swap rather than a price increase.
The RUC discussion is unfolding while gasoline prices have risen sharply. The AAA national average for regular gasoline reached $4.22 per gallon Wednesday, compared with $3.19 a year earlier, while Brent crude climbed above $100 amid disruptions in Middle Eastern energy markets and tanker traffic through the Strait of Hormuz, according to ABC News.
Michigan’s pilot will not decide whether motorists ultimately pay by the mile. Instead, it will give lawmakers data on how such a system might work, who would pay, how mileage could be measured and whether residents would accept it.
That leaves the larger policy question unresolved: whether Michigan eventually replaces fuel taxes with a direct road-use fee, limits such a system to certain vehicles or keeps its current funding structure. MDOT says any permanent change will require another act of the Legislature.
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