Michigan Fuel Inventory Tax Calculator - Calculate One-Time Tax on Dec 31, 2025 Inventory

Michigan Fuel Inventory Tax Calculator

What is the Michigan Fuel Inventory Tax?

The Michigan Fuel Inventory Tax is a one-time special tax on gasoline and undyed diesel fuel held in storage as of 11:59 PM on December 31, 2025. This tax was created to prevent businesses and individuals from stockpiling fuel before the January 1, 2026 tax increase.

Key Details

• Tax rate: 21.4¢ per gallon (the difference between old and new rates)
• Applies to: Fuel held on December 31, 2025 at 11:59 PM
• Report by: February 20, 2026
• Payment due: February 20, 2026
• Form required: Michigan Form 4010

Who Must Pay?

End Users

If you hold fuel for your own use (not for resale):

• Threshold: 3,000 gallons
• Taxable amount: Gallons above 3,000
• Examples: Construction companies, trucking companies, farms with large fuel tanks

Fuel Resellers

If you sell fuel to others (gas stations, wholesalers):

• Small tanks (<10,000 gallons): Threshold is 200 gallons ("dead storage")
• Large tanks (≥10,000 gallons): Threshold is 400 gallons ("dead storage")
• Taxable amount: Gallons above the threshold

How to Calculate Your Tax

Step 1: Determine Your Storage Type

• End User: Fuel for your own vehicles/equipment
• Reseller: Gas stations, fuel distributors, wholesalers

Step 2: Find Your Threshold

• End Users: 3,000 gallons
• Resellers with tanks <10,000 gal: 200 gallons
• Resellers with tanks ≥10,000 gal: 400 gallons

Step 3: Calculate Taxable Gallons

Taxable Gallons = Total Fuel in Storage - Threshold

Step 4: Apply Tax Rate

Tax Owed = Taxable Gallons × $0.214

Example Calculations

Example 1: Construction Company (End User)

• Storage on Dec 31: 5,000 gallons
• Threshold: 3,000 gallons
• Taxable gallons: 5,000 - 3,000 = 2,000
• Tax owed: 2,000 × $0.214 = $428.00

Example 2: Gas Station (Small Tank)

• Tank capacity: 8,000 gallons
• Fuel on Dec 31: 1,500 gallons
• Threshold: 200 gallons (tank < 10,000)
• Taxable gallons: 1,500 - 200 = 1,300
• Tax owed: 1,300 × $0.214 = $278.20

Example 3: Fuel Distributor (Large Tank)

• Tank capacity: 15,000 gallons
• Fuel on Dec 31: 10,000 gallons
• Threshold: 400 gallons (tank ≥ 10,000)
• Taxable gallons: 10,000 - 400 = 9,600
• Tax owed: 9,600 × $0.214 = $2,054.40

Example 4: Small Business (Below Threshold)

• Storage on Dec 31: 2,500 gallons
• Threshold: 3,000 gallons
• Taxable gallons: 0 (below threshold)
• Tax owed: $0.00 ✅

Filing Requirements

Who Must File

Anyone who owes inventory tax must file Form 4010 with the Michigan Department of Treasury.

Filing Deadline

• Due date: February 20, 2026
• Payment due: February 20, 2026 (must accompany report)
• Late penalties: Apply for late filing or payment

Required Information

• Total gallons in storage on December 31, 2025 at 11:59 PM
• Storage tank capacity (for resellers)
• Type of fuel (gasoline or undyed diesel)
• Calculation of taxable gallons
• Payment for amount owed

Where to File

Michigan Department of Treasury Motor Fuel Tax Division P.O. Box 30699 Lansing, MI 48909

Or file electronically through Michigan Treasury Online (MTO).

What Fuel is Subject to This Tax?

Taxable Fuel

• ✅ Gasoline
• ✅ Undyed diesel fuel
• ✅ Fuel in above-ground storage tanks
• ✅ Fuel in underground storage tanks
• ✅ Fuel in portable tanks (if totals exceed threshold)

Exempt Fuel

• ❌ Dyed diesel fuel (for agricultural/heating use)
• ❌ Aviation fuel
• ❌ Fuel in the bulk transfer/terminal system
• ❌ Fuel in vehicle tanks
• ❌ Racing fuel
• ❌ Marine fuel (in certain circumstances)

Tax Planning Strategies

For Businesses

1. Reduce inventory before Dec 31: Lower fuel levels to minimize tax exposure
2. Time deliveries: Delay scheduled deliveries until after January 1, 2026
3. Accurate measurement: Ensure precise inventory counts to avoid overpayment
4. Document everything: Keep detailed records of measurements and calculations
5. Set aside funds: Budget for the February payment now

For End Users

1. Use fuel down: Run equipment to reduce storage below 3,000 gallons
2. Share information: Inform fleet managers of the threshold
3. Consider threshold: Stay below 3,000 gallons if possible
4. Keep receipts: Maintain all fuel purchase records

Common Questions

Why does this tax exist?

To prevent stockpiling of cheap fuel before the tax increase. Without it, businesses could store large amounts at the old tax rate, undermining the revenue goals of the new tax.

Is this tax recurring?

No, this is a one-time tax on fuel held December 31, 2025. You will not pay this tax in future years.

What if I didn't know about this tax?

Ignorance of the law is not an excuse. Late filing and payment penalties will apply. File as soon as possible if you're late.

Can I get a refund if I calculated wrong?

Yes, you can file an amended return if you discover an error. Keep all documentation supporting your claim.

Does fuel in my vehicles count?

No, fuel in vehicle fuel tanks is exempt. Only fuel in storage tanks counts.

What about fuel in portable containers?

If you're an end user, all fuel counts toward the 3,000-gallon threshold, including portable containers.

Can I use estimates?

No, you must use actual measurements. Estimates or averages are not acceptable.

What records should I keep?

Keep tank readings, inventory reports, delivery tickets, and all supporting documentation for at least 4 years.

Penalties for Non-Compliance

Late Filing

• Penalty added to tax owed
• Interest accrues from due date

Late Payment

• Additional penalties apply
• Interest charged on unpaid balance

Failure to File

• More severe penalties
• Potential audit triggers
• Criminal penalties for intentional evasion

Best Practice

File and pay on time, even if you need to estimate. You can file an amended return later if needed.

Understanding "Dead Storage"

For fuel resellers, "dead storage" is the unusable fuel that remains at the bottom of storage tanks and cannot be pumped out. The thresholds account for this:

• 200 gallons for tanks under 10,000 gallons
• 400 gallons for tanks of 10,000 gallons or more

This recognizes that not all fuel in a tank is saleable inventory.

Related Resources

• Michigan Gas Tax Impact Calculator - Calculate how the 2026 tax affects your fuel costs
• Michigan Gas Tax 2026: Complete Guide - Everything you need to know about Michigan's fuel tax changes

Need Help?

Contact Michigan Treasury

• Phone: (517) 636-4660
• Email: [email protected]
• Website: www.michigan.gov/taxes

Consult a Professional

For large inventory holdings or complex situations, consider consulting:

• Tax accountant
• Fuel industry attorney
• Certified Public Accountant (CPA)

Disclaimer: This calculator provides estimates based on information you provide. It is not a substitute for professional tax advice. For official guidance, contact the Michigan Department of Treasury or consult a qualified tax professional.

Last Updated: January 11, 2026