Look at the bottom of your DTE bill — below the electric charges, below the gas charges, there's a line that reads "Detroit Utility Tax." It's 5% of everything you owe in gas and electric costs, and it's not a DTE fee. DTE collects it, but the money goes to the City of Detroit.
Most residents have been paying it for years without knowing what it is or where it goes. Here's a plain answer.
What Is the Detroit Utility Users Tax?
The Detroit utility users tax is a 5% surcharge the City of Detroit levies on gas and electric consumption. It appears as a separate line item on your monthly DTE bill — once under your electric charges, once under your gas charges — and DTE remits the collected funds to the city.
Detroit is the only city in Michigan that charges this tax. Residents comparing bills with family in Dearborn, Warren, or Livonia won't find it there because those cities don't qualify under the statute that authorizes it. Michigan's City Utility Users Tax Act (Public Act 100 of 1990, MCL 141.1151–141.1177) restricts the tax to cities with populations of 600,000 or more. The 600,000-or-more eligibility requirement is codified at MCL 141.1152. Detroit is currently the only Michigan city that meets that threshold and has enacted the ordinance. (Source: Michigan Legislature, MCL 141.1152.)
All Detroit utility customers pay it — residential and commercial alike.
Where the Money Goes: Streetlights and Police
Two destinations. The first is fixed: $12.5 million per year goes to the Public Lighting Authority to pay down bond debt on Detroit's streetlight infrastructure rebuild. The second, and larger, portion goes to the Detroit Police Department for officer hiring and retention. The law is explicit on this point — the non-PLA share must be used "exclusively to retain or hire police officers." (Source: MCL 141.1177.)
The total the tax raises changes year to year based on how much gas and electricity Detroit customers consume. Outlier Media, which has reported on this tax extensively, found the city estimated $33.3 million would go to DPD in 2022, with an additional $12.5 million to the Public Lighting Authority — roughly $45.8 million combined. (Source: Outlier Media, 2022.) The City's FY2026 Mayor's Proposed Budget projected roughly $37 million in utility-tax revenue; as a proposed figure, it may change before the budget is adopted. Year-to-year variation tracks with weather and consumption. Outlier Media also reported that from 2016 to 2020, the tax contributed more than $135 million to DPD. In the 2021–2022 fiscal year alone, the tax was projected to cover nearly 10% of DPD's $341 million budget, per Outlier Media. (Source: Outlier Media, 2022.)
One thing this tax does not fund: energy infrastructure, utility affordability programs, low-income bill assistance, or weatherization. The charge appears alongside utility costs, but none of it goes back into making Detroit homes more efficient or utility bills more manageable.
A Brief History: Why This Tax Exists
The Michigan Legislature authorized Detroit to levy the tax in 1970, in the years following the 1967 Detroit Rebellion, as a mechanism to fund increased police staffing. The original statute applied only to cities above one million residents — Detroit qualified at the time. Later legislative amendments lowered the population threshold to 600,000 or more. (Source: Outlier Media, 2022; Michigan Legislature, MCL 141.1152.)
A 2012 amendment split the revenue, redirecting a fixed $12.5 million annual slice to the Public Lighting Authority as it rebuilt Detroit's deteriorated streetlight network. The core purpose — police funding — has not changed since 1970. The tax predates most current Detroit homeowners and has no sunset provision.
Public Act 100 of 1990 codified the full framework and set the cap at 5%. Detroit charges the maximum allowed by law.
How Much Does This Add to Your Bill?
The math is straightforward. The tax is 5% of whatever you owe in gas and electric charges. If your combined DTE bill is $150 in a given month, the city utility tax adds $7.50. Over a year at that level, that's $90 in city tax alone — on top of everything you're already paying.
The charge scales with consumption. Households using more energy pay more in absolute dollars, which means families in the least-efficient homes — often older, under-insulated, running aging heating systems — pay the most.
There's another layer to this. The Michigan Public Service Commission approved a $242.4 million DTE rate increase that took effect March 5, 2026. (Source: Michigan Public Service Commission, February 2026.) When the base rate rises, the 5% city tax automatically generates more revenue without any additional vote. No council action, no public hearing — the surcharge grows proportionally because the bill it's applied to is larger.
The tax is also not income-adjusted. A household spending 10% of its income on utilities pays the same 5% rate as a household spending 1%.
One More Layer on an Already High Energy Burden
For the full picture of why Detroit energy bills run so high — and what energy burden means at the household level, see our pillar piece on the topic. This section keeps the focus narrow.
The Detroit utility users tax is easy to miss. It shows up as a separate line item, labeled clearly enough, but most residents attribute their high bills to DTE and don't separate out what the city is collecting. Justin Schott, project manager at the University of Michigan's Energy Equity Project, put it plainly: "It still strikes me as a really silly approach to plug gaps in one basic service by taxing a human right for people who already can't afford to pay." (Source: Outlier Media, 2022.) The point isn't to relitigate city budget decisions — it's to name what the tax does structurally: it routes money from a household necessity toward general city services, with no mechanism for relief for the people least able to pay it.
There is currently no low-income exemption, discount, or carve-out for the Detroit utility users tax. Programs like LIHEAP, MEAP, and DTE's own assistance programs can help with the base utility bill. None of them address the 5% city surcharge stacked on top. For more on what energy burden means and why Detroit exceeds the 6% threshold, see our explainer on that.
What Residents Can and Cannot Do About It
The tax is a city ordinance. Residential customers cannot opt out. As long as you have a DTE account in Detroit, you pay the 5%.
What you can influence is the base bill the tax is calculated on. Reduce the kilowatt-hours and therms you consume and the 5% becomes a smaller absolute number. That's the only lever most households have on this specific charge.
Assistance programs — LIHEAP, MEAP, State Emergency Relief — address utility bill balances, not the city surcharge layered on top. And the 2026 DTE rate increase has widened the gap between what programs cover and what households owe. If you're looking for options when you cannot pay your DTE bill, our guide to navigating assistance programs covers the full list.
The consumption-side path is weatherization: insulation, air sealing, equipment upgrades, and health-and-safety repairs that reduce how hard a home works to stay warm or cool. Lower consumption, lower base bill, lower city tax in dollar terms. It won't eliminate the surcharge, but it's the only structural relief available to most homeowners.
How WWGT's Whole Homes, Whole Communities Program Addresses the Underlying Problem
Our Whole Homes, Whole Communities program works on exactly that equation.
WHWC is a four-year initiative funded by $8 million we secured through a settlement in a DTE rate case — money that cycles back into the same neighborhoods most affected by cumulative utility costs. The program provides free home assessments, insulation, air sealing, clean energy upgrades, and health-and-safety repairs to qualifying homeowners in Highland Park and East Detroit. No cost to the homeowner.
Energy efficiency improvements can reduce household utility bills by up to 50%. A lower base bill means every surcharge on top of it, including the 5% city tax, also shrinks in dollar terms. WHWC doesn't pay the utility users tax or offset it directly. What it does is reduce the consumption that generates it — which is the only lever most residents have.
If you own your home in Highland Park or East Detroit, contact us to find out if your address is in the service area and where enrollment currently stands.
Frequently Asked Questions
What is the Detroit utility users tax?
It's a 5% surcharge the City of Detroit levies on gas and electric consumption, authorized under Michigan's City Utility Users Tax Act (Public Act 100 of 1990). DTE collects it from customers with Detroit accounts and remits it to the city. It is not a DTE fee.
What does the Detroit utility tax fund?
Two things: a fixed $12.5 million per year goes to the Public Lighting Authority to pay down bond debt on Detroit's streetlight rebuild; the remainder goes to the Detroit Police Department for officer hiring and retention. The law requires the non-PLA portion to be used exclusively for police. (Source: MCL 141.1177; Outlier Media, 2022.)
Is there an exemption from the Detroit utility users tax for low-income residents?
No. There is currently no low-income exemption, discount, or refund mechanism for residential customers. Federal and state assistance programs (LIHEAP, MEAP, SER) can help with the underlying utility bill, but none of them address the city surcharge on top of it.
Why don't other Michigan cities have this tax?
Michigan's City Utility Users Tax Act restricts it to cities with populations of 600,000 or more, a requirement codified at MCL 141.1152. Detroit is currently the only Michigan city that meets that threshold and has enacted the ordinance. (Source: Michigan Legislature, MCL 141.1152.)
If you want to support WWGT's work bringing free home efficiency repairs to Highland Park and East Detroit, that's the most direct way to expand what this program can reach.
We Want Green Too is a Detroit-based 501(c)(3) nonprofit, EIN 45-5324148, founded in 2007 by Gloria J. Lowe. We work on energy-efficient, healthy housing and green-economy careers for Detroit residents and veterans. Visit us at wewantgreentoo.com.
