Fuel taxes in the United States

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The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel.[1][2] On average, as of April 2014, state and local taxes add 31.5 cents to gasoline and 31.0 cents to diesel, for a total US average fuel tax of 49.9 cents per gallon for gas and 55.4 cents per gallon for diesel.[3]

State taxes[edit]

The first US state tax on fuel was introduced in February 1919 in Oregon.[4] It was a 5¢/gal (1.3¢/L) tax. In the following decade, all of the U.S. states (48 at the time), along with the District of Columbia, introduced a gasoline tax. By 1939, an average tax of 3.8¢/gal (1¢/L) of fuel was levied by the individual states.

The table below includes federal, state and local taxes. The American Petroleum Institute uses a weighted average of local taxes by population of each municipality to come up with an average tax for the entire state. Similarly, the national average is weighted by volume of fuel sold in each state. Because the states with the highest taxes also have higher populations, more states have below average taxes than above average taxes.

Taxes on gasoline and diesel for transportation by U.S. state in U.S. cents per gallon as of April 2014[3]
State Gasoline tax
(includes federal tax of 18.4¢/gal)
Diesel tax
(includes federal tax of 24.4¢/gal)
US (Volume-Weighted) Average 49.9 55.4
Alabama 39.3 46.3
Alaska 30.8 37.1
Arizona 37.4 51.4
Arkansas 40.2 47.2
California 71.3 74.0
Colorado 40.4 44.9
Connecticut 67.7 79.3
Delaware 41.4 46.4
District of Columbia 41.9 47.9
Florida 54.4 56.8
Georgia 45.9 55.3
Hawaii 66.5 74.5
Idaho 43.4 49.4
Illinois 57.5 69.3
Indiana 59.2 75.7
Iowa 40.4 47.9
Kansas 43.4 51.4
Kentucky 48.5 51.5
Louisiana 38.4 44.4
Maine 48.4 55.6
Maryland 45.4 52.2
Massachusetts 44.9 50.9
Michigan 37.4 39.4
Minnesota 47.0 53.0
Mississippi 36.8 42.4
Missouri 35.7 41.7
Montana 46.2 52.9
Nebraska 45.7 51.1
Nevada 51.6 53.0
New Hampshire 40.6 46.6
New Jersey 32.9 41.9
New Mexico 37.3 47.3
New York 68.3 74.8
North Carolina 56.2 62.2
North Dakota 41.4 47.4
Ohio 46.4 52.4
Oklahoma 35.4 38.4
Oregon 49.5 54.7
Pennsylvania 60.2 76.5
Rhode Island 51.4 57.4
South Carolina 35.2 41.2
South Dakota 40.4 48.4
Tennessee 39.8 42.8
Texas 38.4 44.4
Utah 42.9 48.9
Vermont 50.5 55.4
Virginia 35.7 50.5
Washington 55.9 61.9
West Virginia 54.1 60.1
Wisconsin 51.3 57.3
Wyoming 42.4 48.4

Federal taxes[edit]

The first federal gasoline tax in the United States was created on June 6, 1932 with the enactment of the Revenue Act of 1932 with a tax of 1¢/gal (0.3¢/L). Since 1993, the U.S. federal gasoline tax has been 18.4¢/gal (4.86¢/L). Unlike most other goods in the US, the price displayed includes all taxes, as opposed to inclusion at the point of purchase.

Then-Secretary of Transportation Mary Peters stated on August 15, 2007 that about 60% of federal gas taxes are used for highway and bridge construction. The remaining 40% goes to earmarked programs.[5] However, revenues from other taxes are also used in federal transportation programs.

Federal tax revenues[edit]

The federal gasoline tax raised $25 billion on gasoline in 2006.[6] The tax was last raised in 1993, and is not indexed to inflation.

Public policy[edit]

Some policy advisors believe that an increased tax is needed to fund and sustain the country's transportation infrastructure. The National Surface Transportation Infrastructure Financing Commission issued a detailed report[7] in February 2009.

An increased cost of fuel would also encourage less consumption and reduce America's dependence on foreign oil. Americans sent nearly $430 billion to other countries in 2008 for the cost of imported oil. However, thanks to increased domestic output (fracking of shale and other energy resource discoveries) as well as rapidly increasing production efficiencies, this threat (since 2008) is already significantly reduced and expected to continue to fall: http://www.eia.gov/todayinenergy/detail.cfm?id=15531

Other economic advisors point out that gas taxes are one of the most regressive taxes and that gas taxes are a drag on the whole economy because transportation costs (fuel prices) are a significant part of the final cost of most consumer goods, especially agricultural and construction. They suggest that ending the federal diversion of gas tax revenues would be a better way to free up more funds for transportation infrastructure: http://www.cato.org/publications/commentary/five-reasons-not-raise-gas-tax

Aviation fuel taxes[edit]

As of 2011, aviation gasoline (most often used to fuel small General Aviation aircraft) is taxed at 19.4¢/gal.[8]

As of 2007, jet fuel (called "kerosene for aviation" by the IRS) is taxed at 21.9¢/gal unless it is used for commercial aviation (airlines such as American Airlines and US Airways and small chartered commercial jets). Because such commercial operations are subject to the federal transportation tax, they are subject to a reduced fuel tax of 4.4¢/gal.[9]

These taxes mainly fund airport and Air Traffic Control operations by the Federal Aviation Administration (FAA), of which commercial aviation is the biggest user.

See also[edit]

US tax system:

References[edit]

  1. ^ http://www.eia.gov/petroleum/marketing/monthly/pdf/enote.pdf U.S. Energy Information Administration/Petroleum Marketing Monthly
  2. ^ http://www.fhwa.dot.gov/infrastructure/gastax.cfm US Department of Transportation, Federal Highway Administration: When did the Federal Government begin collecting the gas tax?
  3. ^ a b Motor Fuel Taxes, American Petroleum Institute, 25 April 2014
  4. ^ Corning, Howard M. Dictionary of Oregon History. Binfords & Mort Publishing, 1956.
  5. ^ Online NewsHour: Conversation | Peters Discusses Infrastructure | August 15, 2007 | PBS
  6. ^ http://financecommission.dot.gov/background%20documents.html National Surface Transportation Infrastructure Financing Commission
  7. ^ [1]
  8. ^ [2]
  9. ^ [3]

External links[edit]