4 July Gas-Tax Increases

CHICAGO — Gasoline prices got an automatic boost in a dozen states this July thanks to the latest round of fuel-tax increases going into effect.

According to the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP), 12 states increased their gasoline taxes on July 1, and 11 raised their diesel taxes. Illinois, Ohio, California and South Carolina had the largest increases on a cent-per-gallon (CPG) basis, with all funneling the additional revenue to transportation infrastructure improvements. Some states also increased registration fees for electric vehicles (EVs) and hybrids to reflect their road usage.

Here is a recap of the four largest gas-tax increases that debuted this July ...

Illinois doubled its 19-CPG motor-fuel tax to 38 CPG, marking the first increase since 1990, The Chicago Tribune reported. The tax will also be indexed to inflation. Municipalities in Cook County, where Chicago is located, and counties around the city can also levy and increase their own motor-fuel taxes. The state gas-tax increase is expected to raise $25 billion for road projects.

Fuel retailers along the border of Illinois and states with lower gas taxes—including Indiana, Iowa, Missouri, Wisconsin and Kentucky—have warned that the gas-tax increase will put them at a severe competitive disadvantage.

The state's annual registration fee for gasoline-powered vehicles also increased, from $40 to $148, while the fee for EVs increased from $17.50 to $248.

Ohio's gas tax rose by 10.5 CPG to 38.5 CPG and the diesel tax by 19 CPG to 47 CPG on July 1, The Columbus Dispatch reported. When combined with federal fuel taxes, gas taxes will reach 56.9 CPG and diesel taxes 71.4 CPG.

As part of the two-year budget deal that gave a green light to the fuel taxes increases, the Ohio Department of Agriculture is now required to apply stickers to fuel pumps showing gas and diesel taxes.

Ohio has also introduced annual registration fees of $200 for electric vehicles and $100 for hybrids.

With the latest round of gas-tax increases, California now has the highest gas taxes and fees in the U.S. at 57.8 CPG, the Los Angeles Times reported. This places it slightly ahead of Pennsylvania’s 56.8 CPG in fuel taxes.

On July 1, California’s gas tax rose 5.6 CPG. This follows a 12-CPG increase that took place in 2017 as part of Senate Bill 1, which will require the state gas tax to increase each year based on inflation, beginning July 1, 2020.

The South Carolina gas tax increased 2 CPG to nearly 23 CPG on July 1 as part of the latest planned increase as part of the Infrastructure and Economic Development Reform Act. The 2017 legislation increases the state gas tax by 2 CPG each July until 2022, The State reported.

This latest increase is the third of six annual increases, which will raise an estimated $70 million for road maintenance.