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Fuel taxes in the United States

Gas and Diesel taxes (January 2017)

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 64.6 percent from 1993 until 2015. On average, as of January 2017, state and local taxes and fees add 31.04 cents to gasoline and 31.01 cents to diesel, for a total US average fuel tax of 49.44 cents per gallon for gas and 55.41 cents per gallon for diesel.[3]

State taxes

Gas tax by state, with border differences highlighted.

The first US state tax on fuel was introduced in February 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 2017[3]
State Gasoline tax
(excludes federal tax of 18.4¢/gal)
Diesel tax
(excludes federal tax of 24.4¢/gal)
Notes
US (volume-weighted) average 31.04 31.01
Alabama 22.91 21.89
Alaska 12.25 12.75
Arizona 19.00 27.00
Arkansas 21.80 22.80
California 41.70 40.01 Gasoline subject to 2.25% sales tax. Diesel subject to 9.25% sales tax.
Colorado 22.00 20.50
Connecticut 39.85 41.70 Subject to additional 8.1% sales tax
Delaware 23.00 22.00
District of Columbia 23.50 23.50
Florida 36.80 33.77
Georgia 26.30[8] 29.40[8] subject to local sales tax
Hawaii 44.39 41.83 subject to additional sales tax
Idaho 33.00 33.00
Illinois 34.01 35.32 subject to additional sales tax
Indiana 28.00[9] 41.25 subject to additional sales tax
Iowa 30.70 32.50
Kansas 24.03 26.03
Kentucky 26.00 23.00
Louisiana 20.01 20.01
Maine 30.01 31.21
Maryland 33.50 34.25
Massachusetts 26.54 26.54
Michigan 26.3[10] 26.3[10] subject to additional sales tax
Minnesota 28.60 28.60
Mississippi 18.79 18.40
Missouri 17.30 17.30
Montana 27.75 28.50
Nebraska 28.20 27.60
Nevada 33.52 28.56
New Hampshire 23.83 23.83
New Jersey 37.10 33.40
New Mexico 18.88 22.88
New York 43.88 42.68 subject to additional state sales tax of 4% (capped at $2.00/gal) and local sales tax (not capped)
North Carolina 34.55 34.55
North Dakota 23.00 23.00
Ohio 28.01 28.01
Oklahoma 17.00 14.00
Oregon 31.12 30.36
Pennsylvania 58.20 74.70
Rhode Island 34.00 34.00
South Carolina 16.75 16.75
South Dakota 30.00 30.00
Tennessee 26.40 25.40
Texas 20.00 20.00
Utah 29.41 29.41
Vermont 30.46 32.00
Virginia 22.39 26.08
Washington 49.40 49.40
West Virginia 35.70 35.70
Wisconsin 30.90 30.90
Wyoming 24.00 24.00

Federal taxes

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.[11] However, revenues from other taxes are also used in federal transportation programs.

Federal tax revenues

Federal fuel taxes raised $35.2 billion in Fiscal Year 2014, with $25.0 billion raised from gasoline taxes and $10.2 billion raised from taxes on diesel and special motor fuels.[12] The tax was last raised in 1993 and is not indexed to inflation. Total inflation from 1993 until 2015 was 64.6 percent.[13][14]

Public policy

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.[15] 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.[16]

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.[17] 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.[18]

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.[19]

Aviation fuel taxes

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.

See also

US tax system:

References

  1. ^ "Petroleum Marketing Explanatory Notes: The EIA-782 survey" (PDF). US Energy Information Administration/Petroleum Marketing Monthly. 
  2. ^ [www.fhwa.dot.gov] US Department of Transportation, Federal Highway Administration: When did the Federal Government begin collecting the gas tax?
  3. ^ a b "State Motor Fuel Taxes: Notes Summary" (PDF). American Petroleum Institute. January 1, 2017. 
  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. ^ a b [dor.georgia.gov]
  9. ^ [www.wndu.com]
  10. ^ a b [www.michigan.gov]
  11. ^ Online NewsHour: Conversation | Peters Discusses Infrastructure | August 15, 2007 | PBS
  12. ^ "Status of The Federal Highway Trust Fund". US Department of Transportation, Federal Highway Administration. 
  13. ^ US inflation Calculator
  14. ^ [www.taxpolicycenter.org]
  15. ^ "A Federal Gas Tax for the Future". Institute on Taxation Economic Policy. September 23, 2013. 
  16. ^ "Paying Our Way" (PDF). Archived from the original (PDF) on 2009-04-02. 
  17. ^ [www.wsj.com]
  18. ^ "Gasoline Taxes and User Fees Pay for Only Half of State & Local Road Spending". Tax Foundation. January 3, 2014. 
  19. ^ [www.eia.gov]

External links