Here’s How Gasoline Taxes Stack Up State By State

For many states, taxes on gasoline and diesel fuel are an important source of revenue for supporting road and infrastructure programs. Most road work and bridge repair is largely funded by money raised from taxes on gasoline, both at the federal and state level.

The federal government imposes a tax that amounts to about $0.18 per gallon. The money raised through this specific tax is used to finance major repairs to interstate highways and bridges, as well as roads through national parks and other public infrastructure. Recently, the issues surrounding the desperate state of the nation’s road and bridge network have led many to believe that a tax hike might be in order to address the crumbling roads, freeways, and bridges unless another solution is proposed. 

On a state level, the tax situation varies wildly from state-to-state. Automotive resource Mojo Motors examined a study recently that broke down the gas prices in each state respectively, and the results are rather intriguing. It turns out that state-level gasoline taxes (excluding the federal tax) varied from $0.124 cents in Alaska at the least, to $0.505 cents in New York at the highest. You can check out the map below for a complete breakdown of where each state falls:

state-gas-tax-infographic-morning-9-17-14

Source: Mojo Motors


“In this study, we’ve taken the federal tax out of the equation in order to analyze patterns and differences in state fuel taxes. Like so many ‘cost of living’ heat maps, the discrepancy between the coasts and the interior of the US is striking,” Mojo Motors said. “The four most expensive states to live in, according to CNBC, are New York, California, Connecticut, and Hawaii. These are also the four states with the highest taxes on gasoline. Fun fact: the fifth most expensive state to live in, Alaska, has the cheapest gasoline taxes. Drill, baby, drill!”

Even within the states, Mojo writes, gas taxes can vary. It cited Oregon, which has a disparity of about five cents across its counties. “In North Dakota, an additional excise tax of 2 percent is imposed on gasoline sold for use in anything other than a licensed vehicle,” it added.

Source: Thinkstock

Source: Thinkstock

Though gasoline taxes have long been a reliable source of income for road work, recent industry trends are posing trouble for public works departments and federal infrastructure programs. As automakers’ fleet fuel efficiency improves, consumers are buying less gasoline, thereby crimping revenue. New Jersey — which has a state gasoline tax of $0.145 cents, one of the lowest in the country — is considering raising that amount to address the issues.

“New Jersey’s transportation infrastructure in New Jersey is in horrible shape and there’s essentially no money left to pay for any improvements,” said John Wisniewski, Chair of the Assembly Transportation, Public Works, and Independent Authorities Committee, as quoted by NJ.com. “For the last 20 years, New Jersey has been doing nothing more than a series of reckless patchwork moves that have left … our roads and bridges in terrible shape, threatening jobs and public safety.”

Similar issues are playing out nationwide, and states in northern climes are particularly vulnerable. Harsh winters wreak havoc on roadways, as freezing, thawing, sanding and salting, and constant plowing can yield frost heaves, potholes, and general deterioration.

However, another factor at play is an increased sensitivity to the environmental impact that gasoline and its extraction have on the environment. California, which already boasts the second highest gasoline tax in the country, is levying another tax as of January 1 to try and deter people from driving while making public transportation a more appealing option. The tax will be implemented as a part of a plan by California’s former governor, Arnold Schwarzenegger.

state-diesel-changes-2014-09-181

Source: Mojo Motors

Many might think that diesel fuel is taxed in a similar manner of gasoline, but in many instances, it isn’t — perhaps counterintuitively, diesel is actually taxed more in some states, notably Indiana and Pennsylvania, where diesel taxes amount to $0.0993 and $0.103 more per gallon than regular gasoline, respectively.

Not surprisingly, diesel varies wildly by state, too. “In Arizona, diesel is taxed at [$0.19 per gallon] for light vehicles, the same rate as gasoline,” Mojo Motors notes. “For trucks with more than two axles or a gross weight over 26,000 pounds, diesel is taxed at [$0.27 per gallon]. In Illinois, diesel blends of more than 10 percent biodiesel are exempt from state and local sales taxes, though this exemption is set to expire at the end of 2018.”

The federal taxation rate for diesel is $0.244 per gallon, the site says. “In some states, diesel is taxed more than gasoline, in some it is taxed less, and in some it is taxed the same. For all but six states, the difference is within [five cents per gallon],” it added.

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