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] The federal tax was last raised in 1993 and is not indexed to inflation, which increased by a total of 73 percent from 1993 until 2018. On average, as of January 2019, state and local taxes and fees add 33.78 cents to gasoline and 36.23 cents to diesel, for a total US volume-weighted average fuel tax of 52.18 cents per gallon for gas and 60.63 cents per gallon for diesel.[3]

State taxes[edit]

Gas tax by state, with border differences highlighted.

The first US state tax on fuel was introduced on February 25, 1919 in Oregon.[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, an average tax of 3.8¢/gal (1¢/L) of fuel was levied by the individual states.

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 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 2018[8]
State Gasoline tax
(excludes federal tax of 18.4¢/gal)
Diesel tax
(excludes federal tax of 24.4¢/gal)
Notes
Alabama 21.91 21.89
Alaska 14.65 12.75
Arizona 19.00[9] 27.00
Arkansas 21.80 22.80
California 47.7 67.0[10] Gasoline subject to 2.25% sales tax. Diesel subject to 9.25% sales tax.
Colorado 22.00 20.50
Connecticut 43.80 43.80 Subject to additional 8.1% sales tax
Delaware 23.00 22.00
District of Columbia 23.50 23.50
Florida 32.025[11] 32.90 may also be subject to local option taxes of up to an additional 12 cents
Georgia 31.59[12] 29.40[12] subject to local sales tax
Hawaii 16.0 16.0 also subject to county tax of 8.8-18.0 cents and additional sales tax
Idaho 33.00 33.00
Illinois 19.00[13] 21.5 subject to additional county and city excise taxes and state, county, city, and regional sales taxes [14]
Indiana 29.00[15] 48.00 Gasoline subject to additional 7% use tax. No additional tax on Diesel
Iowa 30.50 32.50
Kansas 24.03 26.03
Kentucky 26.00 23.00
Louisiana 20.01 20.01
Maine 30.01 31.21
Maryland 35.30 34.25
Massachusetts 26.54 26.54
Michigan 26.30[16] 26.30[16] subject to additional 6% sales tax
Minnesota 28.60 28.60
Mississippi 18.79 18.40
Missouri 17.35 17.30
Montana 32.25 28.50
Nebraska 30.5 29.9[17]
Nevada 23.805 27.75 also subject to additional local taxes
New Hampshire 23.83 23.83
New Jersey 41.4[18] 48.5
New Mexico 18.88 22.88
New York 25.75 25.70 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 36.2 36.2[19]
North Dakota 23.00 23.00
Ohio 28.01 28.01
Oklahoma 20.00 20.00
Oregon 34.0 34.0 additional local option of 1 to 5 cents
Pennsylvania 57.6 74.1[20]
Rhode Island 34.00 34.00
South Carolina 20.75 20.75
South Dakota 30.00 30.00
Tennessee 26.40 25.40
Texas 20.00 20.00
Utah 30.00 30.00[21]
Vermont 31.22 32.00
Virginia 16.2 20.2 additional 2.1% wholesale tax applies in Northern Virginia and Hampton Roads area
Washington 49.40 49.40
West Virginia 35.70 35.70
Wisconsin 32.90 30.90
Wyoming 24.00 24.00

Federal taxes[edit]

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

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 US 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.[22] 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.[23] The tax was last raised in 1993 and is not indexed to inflation. Total inflation from 1993 until 2017 was 68 percent.[24][25]

Public policy[edit]

Some policy advisors believe that an increased tax is needed to fund and sustain the country's transportation infrastructure. As infrastructure construction costs have grown and vehicles have become more fuel efficient, the purchasing power of fixed-rate gas taxes has declined.[26] 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 tax rates to inflation.[27]

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.[28] But 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.[29]

Some believe that 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, due to increased domestic output (fracking of shale and other energy resource discoveries) as well as rapidly increasing production efficiencies, since 2008 this has already significantly reduced and expected to continue to fall.[30]

Aviation fuel taxes[edit]

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

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

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

Taxes on gasoline and kerosene for aviation use have different tax rates than ground transportation by US state. The rate shown is in US cents per gallon as of September 2017[31]
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[11] 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 [32]
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. January 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. ^ "State Gasoline Tax Rates as of July 2018". Tax Foundation. August 8, 2018.
  9. ^ "Ariz. Rev. Stat. Sec. 28-5606". www.azleg.gov. Retrieved December 24, 2018.
  10. ^ "The Ups and Downs Of California's Gas Tax". Tax Policy Center. Retrieved April 21, 2019.
  11. ^ a b "Florida Announces 2019 Motor Fuel Tax Rates".
  12. ^ a b https://dor.georgia.gov/sites/dor.georgia.gov/files/related_files/document/LATP/Policy%20Bulletin/Bulletin%20-%20State%20Excise%20Tax%20Rate%20-%20Effective%20January%202017%20-%20Copy.pdf
  13. ^ https://www2.illinois.gov/rev/questionsandanswers/pages/446.aspx
  14. ^ Caruso, Vincent. "Senate bill would double Illinois state gas tax". Illinois Policy. Retrieved April 21, 2019.
  15. ^ http://www.wndu.com/content/news/New-laws-budget-items-take-effect-in-Indiana-and-Michigan-on-Saturday-431727563.html
  16. ^ a b https://www.michigan.gov/documents/mdot/MDOT_fastfacts02-2011_345554_7.pdf
  17. ^ http://www.revenue.nebraska.gov/fuels/fuelrate.html. Missing or empty |title= (help)
  18. ^ Marcus, Samantha. "New Jersey's gas tax goes up Monday (and so do other taxes). Here's what you need to know". Newark Star Ledger. Retrieved April 21, 2019.
  19. ^ https://www.ncdor.gov/taxes/motor-fuels-tax-information/motor-fuels-tax-rates. Missing or empty |title= (help)
  20. ^ https://www.revenue.pa.gov/GeneralTaxInformation/Current%20Tax%20Rates/Pages/LFFT%20Rates.aspx. Missing or empty |title= (help)
  21. ^ Davidson, Lee (December 28, 2018). "Utah's gas tax will go up a bit as the New Year arrives". Salt Lake Tribune. Retrieved April 22, 2019.
  22. ^ Online NewsHour: Conversation | Peters Discusses Infrastructure | August 15, 2007 | PBS
  23. ^ "Status of The Federal Highway Trust Fund". US Department of Transportation, Federal Highway Administration.
  24. ^ CPI Inflation Calculator
  25. ^ http://www.taxpolicycenter.org/briefing-book/what-are-major-federal-excise-taxes-and-how-much-money-do-they-raise
  26. ^ "A Federal Gas Tax for the Future". Institute on Taxation Economic Policy. September 23, 2013.
  27. ^ "Paying Our Way" (PDF). Archived from the original (PDF) on April 2, 2009.
  28. ^ https://www.wsj.com/articles/states-siphon-gas-tax-for-other-uses-1405558382
  29. ^ "Gasoline Taxes and User Fees Pay for Only Half of State & Local Road Spending". Tax Foundation. January 3, 2014.
  30. ^ http://www.eia.gov/todayinenergy/detail.cfm?id=15531
  31. ^ " "Motor Fuel Tax Information by State, September 2017". Federation of Tax Administrators. Retrieved April 29, 2019.
  32. ^ "Massachusetts Fuel Excise Rates" (PDF). Retrieved April 29, 2019.

External links[edit]