LANSING, Mich. (Michigan News Source) – The state of Michigan had claimed that a 21.4 cents per gallon motor fuel tax increase would not be a price increase because at the same time, it was dropping the 6% sales tax on gas.

So far, the gas station pumps agree as the changes took effect Jan. 1 and gas prices in Michigan have dropped.

MORE NEWS: “Full Stop:” Michigan University Banishes Trendy Talk for 2026

The average price of a gallon of unleaded gasoline was $2.73 in Michigan on Dec. 31. The price remained at $2.73 on Jan. 1 and dropped to $2.72 on Jan. 2.

On Jan. 1, the tax on a gallon of gas increased from 31.0 cents to 52.4 cents. The 6% sales tax was discontinued.

The state said that it will send 98% of the money generated by the gas tax hike to the Michigan Transportation Fund, which funds road projects.

The national average for a gallon of unleaded gas was $2.83 as of Jan. 2.