Michigan Fuel Inventory Tax Calculator

This calculator estimates the one-time Michigan inventory tax owed on gasoline and undyed diesel that was sitting in storage tanks when the state's higher per-gallon fuel tax took effect on January 1, 2026. It subtracts the exempt gallons for your situation, 3,000 gallons for end users or a 200- or 400-gallon dead-storage allowance for resellers, and multiplies the remaining gallons by 21.4 cents, the increase from 31.0 to 52.4 cents per gallon. It is for informational purposes only; the result is an estimate, and the Michigan Department of Treasury's Form 4010 instructions control what you actually owe.

The figures come from Treasury's updated notice on the fuel tax changes in Public Acts 17–20 of 2025, which sets the floor stock tax at $0.524 − $0.31 = $0.214 per gallon on previously taxed gasoline and undyed diesel held at 11:59 p.m. on December 31, 2025, reported on Form 4010 (Gasoline and Diesel Fuel Inventory Report) by February 20, 2026.

The Michigan gas tax calculator covers what the rate change means for drivers, and the Michigan gas tax guide explains the full 2026 restructuring.

Why a one-time inventory tax exists

When a state raises a per-gallon fuel tax, the tax on fuel already sitting in a distributor's, retailer's, or fleet's tanks was paid at the old rate. Without an inventory (or "floor stock") tax, a business could fill every tank on December 31 and sell or burn that fuel for weeks at the old rate. Michigan's inventory tax closes that gap by charging the difference between the new and old rates on gallons held when the new rate starts.

It is a one-time charge tied to the January 1, 2026 rate change. Future annual inflation adjustments to the per-gallon rate would only create a new inventory tax if a law imposed one.

Inputs the calculator uses

The exemptions built into the calculator

• End users: Treasury's notice sets the end-user threshold at 3,000 gallons. The calculator taxes only the gallons above 3,000; if Treasury's Form 4010 instructions treat the threshold differently for you, the instructions control.
• Resellers with tanks under 10,000 gallons: 200 gallons of dead storage per tank are exempt.
• Resellers with tanks of 10,000 gallons or more: 400 gallons of dead storage per tank are exempt.

Dead storage is the fuel at the bottom of a tank that a pump cannot draw out. Treasury applies the allowance per tank, not per tank compartment, which is why the calculator asks about one tank at a time.

Treasury's notice also leaves out three groups of gallons: fuel you will use for a nontaxable purpose under the Motor Fuel Tax Act (for example off-road use or implements of husbandry), fuel a wholesaler bought before the deadline that was still in transit and not yet delivered to a bulk tank or sold, and dyed diesel. Subtract any of these before entering your gallons.

The formula

Taxable gallons = gallons in storage − exempt gallons (never below zero)

Tax = taxable gallons × the floor stock rate ($0.214 by default)

The calculator also shows a comparison table at several storage levels, so you can see how close you were to the threshold.

Worked examples

Construction company with an on-site diesel tank (end user)

• Undyed diesel in storage on December 31: 5,000 gallons
• Exempt: 3,000 gallons
• Taxable: 2,000 gallons
• Tax: 2,000 × $0.214 = $428.00

Farm or landscaper below the threshold (end user)

• Gasoline in storage: 2,500 gallons
• Exempt: 3,000 gallons
• Tax: $0

Fuel in this situation is below the end-user exemption, so the calculator shows nothing owed. Dyed diesel used off-road is outside the calculator's scope because the inventory tax in the calculator applies only to gasoline and undyed diesel.

Convenience store with an 8,000-gallon tank (reseller)

• Gasoline in storage: 1,500 gallons
• Exempt dead storage (tank under 10,000 gallons): 200 gallons
• Taxable: 1,300 gallons
• Tax: 1,300 × $0.214 = $278.20

Station with two 12,000-gallon tanks (reseller)

Run the calculator once per tank, because the dead-storage allowance is tied to each tank's capacity.

• Tank 1, regular unleaded: 7,800 gallons − 400 = 7,400 taxable × $0.214 = $1,583.60
• Tank 2, diesel: 3,100 gallons − 400 = 2,700 taxable × $0.214 = $577.80
• Total: $2,161.40

Fuel distributor's 15,000-gallon bulk tank (reseller)

• Gasoline in storage: 10,000 gallons
• Exempt dead storage: 400 gallons
• Taxable: 9,600 gallons
• Tax: 9,600 × $0.214 = $2,054.40

How much the threshold was worth

For end users, the 3,000-gallon exemption is worth up to 3,000 × $0.214 = $642. For resellers, the dead-storage allowance is worth $42.80 per small tank and $85.60 per large tank. Above those levels, every 1,000 gallons in storage cost $214 in inventory tax.

Measuring the gallons correctly

The tax is only as accurate as the inventory count. Good practice for a year-end reading:

• Use automatic tank gauge (ATG) reports where you have them, printed or exported at the close of December 31.
• For manually gauged tanks, take a stick reading in inches and convert it to gallons with the tank manufacturer's chart for that tank's size and shape. A reading of the wrong chart can be off by hundreds of gallons in a large tank.
• Separate products. Record gasoline and diesel tanks individually, even if the rate difference is the same, because the return may ask for them separately.
• Note deliveries in transit. A load that arrived on January 1 was not in your tanks on December 31; a load dropped at 6 p.m. on December 31 was.
• Keep the evidence. Save gauge printouts, stick readings with the chart used, delivery tickets around the year-end, and the calculation itself. Michigan can audit returns for several years after filing.

Recovering the cost through pricing

For a reseller, the inventory tax is simply the new per-gallon rate arriving a few weeks early on fuel already in the ground. The distributor in the example above paid $2,054.40 on 9,600 taxable gallons. Spread across the full 10,000 gallons it sold in early January, that is about 20.5 cents per gallon, just under the 21.4-cent rate increase that every competitor buying fresh fuel in January was paying anyway. Stations that raised the pump price on January 1 in line with the new rate recovered the tax from those sales.

End users cannot pass the cost along as directly. A contractor's $428 is a one-time increase in the cost of the diesel it burned in January, which it may recover through job pricing over time. For both groups, the cash-flow point is timing: the tax fell due weeks after the fuel was used or sold, so the money should have been set aside from January revenue.

Accounting and income tax treatment

The inventory tax is a cost of doing business:

• Resellers typically treat it as part of the cost of the fuel sold, and most priced it into January sales. On the federal return it reduces gross profit through cost of goods sold or is deducted as a tax, depending on your accounting method.
• End users such as contractors, fleets, and farms generally deduct it as an ordinary business tax expense in the year paid, or capitalize it into the fuel cost if that is your consistent method.
• Not deductible for personal use. Fuel held for personal vehicles is not a business expense, but households rarely store enough fuel to owe the tax.

If you are an interstate carrier, remember that IFTA fuel tax reporting is separate from this one-time tax; see the IFTA tax calculator.

Filing late or correcting a mistake

The calculator shows the original due date of February 20, 2026. If you held taxable fuel and did not file:

1. Gather the December 31, 2025 inventory records described above. If you lack an exact reading, reconstruct it from delivery tickets and sales or usage records for late December and early January.
2. Calculate the tax with this calculator to set your expected amount.
3. File Form 4010 and pay through the Michigan Department of Treasury. Treasury's notice warns that failing to file results in an assessment for tax, interest, and penalty, and both grow the longer the balance is outstanding. If Treasury mailed you a Form 4010 and you had no taxable gallons, you still must return it with the "no taxable gallons" box in Part 1 checked.
4. Keep a copy of everything in case Treasury asks for support.

If you filed and later found an error, such as counting dead storage or using the wrong tank chart, contact Treasury about filing a corrected return. Overpayments are generally refundable within Michigan's statute of limitations, so it is worth correcting a significant overstatement.

Limits of this estimate

• The calculator applies one rate (21.4 cents by default) to both gasoline and undyed diesel; it does not handle other fuels.
• It uses the exemption amounts described above. If Treasury's instructions define an exemption, a tank, or the measurement time differently for your situation, the instructions control.
• It does not compute penalty or interest for late filing.
• Businesses with many locations should run the numbers per tank and per site, then add them.

For the bigger picture of how Michigan's fuel tax compares with neighboring states, read Michigan vs Ohio gas tax.