WASHINGTON -- The average state gasoline tax was 26.5 cents per gallon (CPG) as of the start of 2016, although this is sure to shift as states take a second look at their tax formulas and declining revenues.
According to a recent analysis by the Energy Information Administration (EIA), the lowest state gas taxes and fees as of Jan. 1 were in Alaska at 8.95 CPG. Pennsylvania had the highest state tax at 51.4 CPG—not including the 18.4-CPG federal fuel excise tax, which brings the tax total to 69.8 CPG. In 2013, Pennsylvania passed a stepped, nearly 25-CPG increase to its motor fuel tax to help pay for infrastructure improvements.
The next-highest gas taxes—state and federal combined—were in Washington (63.02 CPG), California (55.56 CPG), North Carolina (53.65 CPG) and Rhode Island (52.52 CPG).
Several states adjusted their gas taxes in 2016, with five—Washington, Idaho, South Dakota, Iowa and Georgia—having increases of 5 CPG or more. Four states—California, Illinois, Indiana and Michigan—dropped their gas taxes by 5 CPG or more.
State diesel taxes averaged a bit higher at 27.4 CPG, with Alaska again having the lowest at 8.95 CPG. Pennsylvania was the highest with its 65.1-CPG diesel tax, not including the 24.4-CPG federal tax on diesel.
Most fuel taxes support transportation infrastructure and road maintenance, although some fees also raise money for environmental protection and dedicated funds such as the Leaking Underground Storage Tank Trust Fund (LUST), which gets 0.1 CPG from the federal fuel tax.
In addition, local governments and municipalities in many states can levy their own motor fuel taxes. They can be in effect across the state, such as in Hawaii and Florida, or just in select counties, as is the case in Mississippi, where three counties on the Gulf of Mexico must pay a seawall tax. And municipalities such as Chicago levy their own fuel taxes on top of the federal and state taxes. These local taxes could be CPG taxes or percentages of the fuel purchase price.
As vehicle fuel economy has risen, motor fuel tax revenue has fallen. And some states that have fixed per-gallon taxes have seen revenues lose buying power with rising inflation, which can put them in a funding bind for highway construction and maintenance. To avoid this, some states index their motor fuel tax, either in total or in part, to inflation. Georgia recently signed a law that would index its excise tax to Corporate Average Fuel Economy (CAFE) standards and the consumer price index.
And still other states are turning to road usage, or vehicle miles traveled (VMT), fees to help pay for infrastructure repair. After a pilot effort, Oregon launched its voluntary OreGo VMT program in 2015. Users, who have a device installed in their vehicle to track the miles they drive, pay a 1.5-cent-per-mile fee. They get credits for fuel-related taxes paid at the gas station. And California is preparing a VMT pilot program to launch this summer.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.