Fuel taxes in the United States

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Fuel taxes in the united states

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] The federal tax was last raised October 1, 1993 and is not indexed to inflation, which increased by a total of 77 percent from 1993 until 2020. On average, as of April 2019, state and local taxes and fees add 34.24 cents to gasoline and 35.89 cents to diesel, for a total US volume-weighted average fuel tax of 52.64 cents per gallon for gas and 60.29 cents per gallon for diesel.[3]

State taxes[edit]

The first US state to tax fuel was Oregon and was introduced on February 25, 1919.[4] It was a 1¢/gal tax.[5] In the following decade, all of the US states (48 at the time), along with the District of Columbia, introduced a gasoline tax. By 1939, the many states levied an average fuel tax of 3.8¢/gal (1¢/L).

In the years since being created, state fuel taxes have undergone many revisions.[6] While most fuel taxes were initially levied as a fixed number of cents per gallon, as of 2016, nineteen states and District of Columbia have fuel taxes with rates that vary alongside changes in the price of fuel, the inflation rate, vehicle fuel-economy, or other factors.[7]

The table below includes state and local taxes and fees. 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 many of the states with the highest taxes also have higher populations, more states (i.e., the less populated ones) have below average taxes than above average taxes.

Most states exempt gasoline from general sales taxes. However, several states do collect full or partial sales tax in addition to the excise tax. Sales tax is not reflected in the rates below.

Taxes on gasoline and diesel for transportation by US state in US cents per gallon as of July 2021[8]
State Gasoline tax (¢/gal)
(excludes federal tax of 18.4¢/gal)
Diesel tax (¢/gal)
(excludes federal tax of 24.4¢/gal)
Notes
Alabama 29.21 30.15
Alaska 14.66 14.40
Arizona 19.00 27.00
Arkansas 24.80 28.80
California 66.98 93.08 Gasoline subject to 2.25% sales tax. Diesel subject to 9.25% sales tax.
Colorado 22.00 20.50 In the city of Colorado Springs, Off-road Dyed Diesel and Gasoline are subject to a local city sales tax.
Connecticut 35.75 44.10 Subject to additional 8.1% sales tax
Delaware 23.00 22.00
District of Columbia 28.80 28.80
Florida 42.26 35.57 may also be subject to local option taxes of up to an additional 12 cents
Georgia 36.09 39.17 subject to local sales tax
Hawaii 50.17 50.81 also subject to county tax of 8.8-18.0 cents and additional sales tax
Idaho 33.00 33.00
Illinois 59.56 65.22
Indiana 49.79 54.00 Gasoline subject to additional 7% use tax. No additional tax on Diesel
Iowa 30.00 32.50
Kansas 24.03 26.03
Kentucky 26.00 23.00
Louisiana 20.01 20.01
Maine 30.01 31.21
Maryland 36.10 36.85
Massachusetts 26.54 26.54
Michigan 45.12 44.46 subject to additional 6% sales tax
Minnesota 30.60 30.60
Mississippi 18.79 18.40
Missouri 17.42 17.42
Montana 32.75 30.20
Nebraska 28.60 28.00
Nevada 50.48 28.56 also subject to additional local taxes
New Hampshire 23.83 23.83
New Jersey 50.7 57.7
New Mexico 18.88 22.88
New York 46.19 44.64 subject to additional state sales tax of 4% (capped at $2.00/gal) and local sales tax (not capped), average combined sales taxes add roughly 20 cents
North Carolina 36.35 36.35
North Dakota 23.00 23.00
Ohio 38.51 47.01
Oklahoma 20.00 20.00
Oregon 38.83 38.06 additional local option of 1 to 5 cents
Pennsylvania 58.70 75.20
Rhode Island 35.00 35.00
South Carolina 26.75 26.75
South Dakota 30.00 30.00
Tennessee 27.40 28.40
Texas 20.00 20.00
Utah 31.41 31.41
Vermont 31.28 32.00
Virginia 34.40 35.30
Washington 49.40 49.40
West Virginia 35.70 35.70
Wisconsin 32.90 32.90
Wyoming 24.00 24.00

Federal taxes[edit]

5
10
15
20
1940
1950
1960
1970
1980
1990
2000
2010
2020

The first federal gasoline tax in the United States was created on June 6, 1932, with the enactment of the Revenue Act of 1932, which taxed 1¢/gal (0.3¢/L). Since 1993, the US federal gasoline tax has been unchanged (and not adjusted for inflation of nearly 68-77% through 2016, depending on source) at 18.4¢/gal (4.86¢/L). Unlike most other goods in the US, the price advertised (e.g., on pumps and on stations’ signs) includes all taxes, as opposed to inclusion at the point of purchase (i.e., as opposed to prices of goods in, e.g., many stores advertised on shelves without tax which is instead calculated at checkout by many vendors).

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, including a minority for mass transit projects.[9] However, revenues from other taxes are also used in federal transportation programs.

Federal tax revenues[edit]

Federal fuel taxes raised $36.4 billion in Fiscal Year 2016, with $26.1 billion raised from gasoline taxes and $10.3 billion raised from taxes on diesel and special motor fuels.[10] The tax was last raised in 1993 and is not indexed to inflation. Total inflation from 1993 until 2017 was 68 percent or up to 77 percent, depending on source.[11][12]

Public policy[edit]

Some policy advisors believe that an increased tax is needed to fund and sustain the country's transportation infrastructure, including for mass transit. As infrastructure construction costs have grown and vehicles have become more fuel efficient, the purchasing power of fixed-rate gas taxes has declined (i.e., the unchanged tax rate from 1993 provides less real money than it originally did, when adjusted for inflation).[13] To offset this loss of purchasing power, The National Surface Transportation Infrastructure Financing Commission issued a detailed report in February 2009 recommending a 10 cent increase in the gasoline tax, a 15 cent increase in the diesel tax, and a reform tying both of these tax rates to inflation.[14]

Critics of gas tax increases argue that much of the gas tax revenue is diverted to other government programs and debt servicing unrelated to transportation infrastructure.[15] However, other researchers have noted that these diversions can occur in both directions and that gas taxes and "user fees" paid by drivers are not high enough to cover the full cost of road-related spending.[16]

Some believe that an increased cost of fuel would also encourage less consumption and reduce America's dependence on foreign oil.[citation needed] Americans sent nearly $430 billion to other countries in 2008 for the cost of imported oil.[citation needed] However and especially since 2008, increased domestic output (e.g., fracking of shale and other energy resource discoveries) and rapidly increasing production efficiencies have significantly reduced such spending, and this falling trend is expected to continue.[17]

Aviation fuel taxes[edit]

Aviation gasoline (Avgas): The tax on aviation gasoline is $0.194 per gallon.[citation needed] When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $0.141 per gallon.[citation needed]

Kerosene for use in aviation (Jet fuel): Generally, kerosene is taxed at $0.244 per gallon unless a reduced rate applies.[citation needed] For kerosene removed directly from an on-airport terminal (ramp) directly into the fuel tank of an aircraft for use in non-commercial aviation, the tax rate is $0.219.[citation needed] The rate of $0.219 also applies if kerosene is transported directly into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene (again, when done directly on-airport, e.g., on the ramp). Notably, the airport terminal doesn't need to be a passenger carrying, secured airport terminal for this rate to apply. However, the refueling truck, tanker, or tank wagon must meet the requirements discussed later under certain refueler trucks, tankers, and tank wagons, treated as terminals.

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

Taxes on gasoline and kerosene for aviation use have different tax rates than ground transportation by US state. [18] The rate shown is in US cents per gallon as of September, 2017 (an updated list is available as of February, 2021).[19]
State Aviation Fuel Tax
(excludes federal tax of 19.4¢/gal)
Jet Fuel Tax
(excludes federal tax of 24.4¢/gal)
Notes
Alabama 9.5 3.5
Alaska 4.7 3.2
Arizona 5.0 0 Jet Fuel is not subject to Motor Fuel Taxes
Arkansas 21.8 22.8 Aviation Fuel and Jet Fuel are subject to 6.5% State Sales and Use Tax plus local sales and use tax based on point of delivery
California 18.0 2.0
Colorado 6.0 4.0
Connecticut exempt exempt Subject to additional 8.1% sales tax
Delaware 23.00 exempt
District of Columbia 23.50 23.50
Florida 6.95[20] 6.9 may also be subject to local option taxes of up to an additional 12 cents
Georgia 7.5 7.5 subject to local sales tax
Hawaii 1.0 1.0 also subject to county tax of 8.8-18.0 cents and additional sales tax
Idaho 7.0 6.0
Illinois 1.1 1.1
Indiana 49.0 21.0
Iowa 8.0 5.0
Kansas 24.0 26.0
Kentucky 26.00 exempt Jet Fuel is subject to 6% Sales Tax
Louisiana exempt exempt Exempt if used for aviation use, otherwise 20.0 cents per gallon
Maine 30.0 3.4
Maryland 7.0 7.0
Massachusetts 27.3 10.9 [21]
Michigan 3.0 3.0
Minnesota 5.0 15.0
Mississippi 6.4 5.25
Missouri 9.0 exempt Additional charges apply for agriculture inspection fee and underground storage fee
Montana 4.0 4.0
Nebraska 5.0 3.0
Nevada 2.0 1.0 also subject to additional county taxes, up to 8 cents per gallon on Aviation Fuel, 4 cents per gallon for Jet Fuel
New Hampshire 4.0 2.0 The rate for Jet Fuel for aircraft operating under FAR Part 121 is 0.5 cents per gallon
New Jersey 10.56 13.56
New Mexico 17.0 See notes Jet Fuel is subject to gross receipts tax
New York 6.5 6.5
North Carolina 0.0025 0.0025 tax is an inspection fee
North Dakota 8.0 8.0
Ohio exempt exempt
Oklahoma 0.08 0.08 Also there is a $.01 per gallon Underground Storage Fee is due on all motor fuels
Oregon 11.0 3.0
Pennsylvania 5.5 1.6
Rhode Island exempt exempt
South Carolina 0.25 0.25 Taxes are for inspection fee and environmental impact fee
South Dakota 6.0 4.0
Tennessee 1.4 1.4
Texas 20.0 20.0
Utah 9.0 6.5 2.5 cents for federally certificated air carriers (@ international airport) 6.5 cents for federally certificated air carriers (airports other than international) 9 cents/gallon all other operations
Vermont 31.22 See Notes Jet Fuel is subject to 6% Sales Tax
Virginia 5.0 5.0
Washington 11.0 11.0
West Virginia 11.7 11.7
Wisconsin 6.0 6.0
Wyoming 5.0 5.0

See also[edit]

US tax system:

References[edit]

  1. ^ "Petroleum Marketing Explanatory Notes: The EIA-782 survey" (PDF). US 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. ^ "State Motor Fuel Taxes: Notes Summary" (PDF). American Petroleum Institute. April 1, 2019.
  4. ^ Corning, Howard M. Dictionary of Oregon History. Binfords & Mort Publishing, 1956.
  5. ^ "A brief history of Oregon vehicle fees and fuel taxes". The Oregonian/Oregon Live. December 12, 2010.
  6. ^ Ang-Olson, Jeffrey; et al. (July 1999). "Variable-Rate State Gasoline Taxes" (PDF). Institute of Transportation Studies, University of California Berkeley.
  7. ^ "Most Americans Live in States with Variable-Rate Gas Taxes". Institute on Taxation Economic Policy. February 5, 2016.
  8. ^ https://www.api.org/oil-and-natural-gas/consumer-information/motor-fuel-taxes
  9. ^ Online NewsHour: Conversation | Peters Discusses Infrastructure | August 15, 2007 | PBS
  10. ^ "Status of The Federal Highway Trust Fund". US Department of Transportation, Federal Highway Administration.
  11. ^ CPI Inflation Calculator
  12. ^ "What are the major federal excise taxes, and how much money do they raise?".
  13. ^ "A Federal Gas Tax for the Future". Institute on Taxation Economic Policy. September 23, 2013.
  14. ^ "Paying Our Way" (PDF). Archived from the original (PDF) on April 2, 2009.
  15. ^ https://www.wsj.com/articles/states-siphon-gas-tax-for-other-uses-1405558382
  16. ^ "Gasoline Taxes and User Fees Pay for Only Half of State & Local Road Spending". Tax Foundation. January 3, 2014.
  17. ^ http://www.eia.gov/todayinenergy/detail.cfm?id=15531
  18. ^ " "Motor Fuel Tax Information by State, September 2017". Federation of Tax Administrators. Retrieved April 29, 2019.
  19. ^ U.S. Energy Information Administration. "State Aviation Fuel Rates - February 2021". Retrieved March 18, 2021.
  20. ^ "Florida Announces 2019 Motor Fuel Tax Rates". November 30, 2018.
  21. ^ "Massachusetts Fuel Excise Rates" (PDF). Retrieved April 29, 2019.

External links[edit]