Natural Gas Laws and Incentives in Michigan
The list below contains summaries of all Michigan laws and incentives related to natural gas.
Laws and Regulations
Alternative Fuel Commercial User Tax
An alternative fuel commercial user that has not paid fuel taxes to an alternative fuel dealer must file a monthly report with the Michigan Department of Treasury (Department) to determine taxes owed under Michigan Compiled Laws 207.1152. By the twentieth day of each month, users must file the report detailing the number of gallons or gallon equivalents of alternative fuel consumed during the preceding month. Alternative fuel commercial users must pay the full amount of tax due to the Department at the time of filing the report. (Reference Michigan Compiled Laws 207.1154)
Alternative Fuel Dealer and Commercial User License
Alternative fuel dealers and alternative fuel commercial users must apply for a license from the Michigan Department of Treasury. Commercial users are defined as those operating vehicles with three or more axles, or two axles and a gross vehicle weight rating exceeding 26,000 pounds, that operate in more than one state. Alternative fuel dealers must pay a license fee of $500 and commercial users must pay a license fee of $50. For the purpose of this requirement, alternative fuels include natural gas, propane, hydrogen, and hythane. (Reference Michigan Compiled Laws 207.1151, 207.1153, and 207.211)
Alternative Fuel Excise Tax
Alternative fuels are taxed equal to the motor fuel tax on a gallon equivalent basis. Alternative fuels include natural gas, propane, hydrogen, and hythane. A gallon equivalent is defined as 5.660 pounds (lbs.) of compressed natural gas, 6.06 lbs. of liquefied natural gas, 480.11 standard cubic feet of hydrogen, and 162.44 standard cubic feet of hydrogen compressed natural gas. A gallon of propane is measured as 4 quarts or 3.785 liters. (Reference Michigan Compiled Laws 207.1003, 207.1151, and 207.1152)
Alternative Fuel Development Property Tax Exemption
Industrial property that is used for high-technology activities or the creation or synthesis of biodiesel fuel may be eligible for a tax exemption. High-technology activities include those related to advanced vehicle technologies such as electric, hybrid electric, or alternative fuel vehicles and their components. To qualify for the tax exemption, an industrial facility must obtain an exemption certificate for the property from the Michigan State Tax Commission. (Reference Michigan Compiled Laws 207.552 and 207.803-207.809)
Alternative Fuel Vehicle (AFV) Emissions Inspection Exemption
Dedicated AFVs powered by compressed natural gas, propane, electricity, or any other source as defined by the Michigan Department of Transportation are exempt from emissions inspection requirements. (Reference Michigan Compiled Laws 324.6311 and 324.6512)
Natural Gas Fueling Station Air Quality Permit Exemption
The Michigan Department of Environmental Quality requirement to obtain an installation permit does not apply to qualified natural gas, hydrogen, and propane storage and handling equipment at dispensing facilities. (Reference Michigan Air Pollution Control Rule 336.1284)
Natural Gas Vehicle (NGV) Weight Exemption
A vehicle primarily powered by natural gas may exceed the state's axle and weight loading limits by a weight equal to the difference between the weight of the vehicle with the natural gas tank and fueling system and the weight of a comparable vehicle with a diesel tank and fueling system. The NGV maximum gross weight may not exceed 82,000 pounds. (Reference Michigan Compiled Laws Section 257.722)
School Bus Replacement Funding
The Michigan Department of Environmental Quality (DEQ) is accepting applications for the replacement of diesel school buses with all-electric or alternative fuel vehicles through the Fuel Transformation Program. Vehicles must meet model year and use requirements. The program is funded by Michigan’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including program guidance and application deadlines, see the DEQ Fuel Transformation Program website.
More Laws and Incentives
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