Gas Tax Rates by State, 2024

Gas taxes affect the lives and finances of most Americans. Today's map illustrates gas tax A gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline. rates across states for 2024.

States levy taxes on fuel in a few different ways, including sales taxes, excise taxes per gallon purchased at the pump, and taxes on wholesalers or retailers, which generally get passed on to consumers via increased prices. These taxes, combined with a myriad of fees (e.g., underground storage tank fees), add to the price consumers pay at the pump.

We combine these taxes and fees to calculate the total taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. rate on gas for each state. The map demonstrates the wide range of tax rates across the US.

California pumps up its gas tax the most at 68.1 cents per gallon (cpg), followed by Illinois (66.5 cpg) and Pennsylvania (58.7 cpg). The lowest gas tax rates are levied in Alaska at 8.95 cpg, followed by Mississippi (18.4 cpg) and Hawaii (18.5 cpg). These rates don't include the effects of cap-and-tradecarbon policies or low carbon fuel standards, which drive prices even higher in California, Washington, and select northeastern states.

The gas tax is meant to function as a user feeA user fee is a charge imposed by the government for the primary purpose of covering the cost of providing a service, directly raising funds from the people who benefit from the particular public good or service being provided. A user fee is not a tax, though some taxes may be labeled as user fees or closely resemble them. , charging drivers to fund the construction and maintenance of the roads they drive on. User fees are a way to attribute the costs of government services to the people who use them, avoiding charging people taxes for things they do not want or use. Transportation services particularly benefit from a user-fee pay structure.

However, with the increasing prominence of electric vehicles (which avoid the gas tax) and general improvements to vehicle fuel efficiencies, the gas tax's ability to be an effective user fee for road use is steadily diminishing. Additionally, many states do not index their rates to inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a "hidden tax," as it leaves taxpayers less well-off due to higher costs and "bracket creep," while increasing the government's spending power. , so the real value of their revenues erodes over time.

Many states have considered replacing their gas taxes with vehicle miles traveled (VMT) taxes instead, using actual miles driven as the metric for the user fee instead of gas consumed. If properly calibrated, this would eliminate the non-neutral treatment of vehicles with different fuel efficiencies, align roadway revenues to expenditures, and ensure that drivers are the ones paying for the roads in the future.

Some states have explored environmental taxes or carbon taxes, which would also impact the price of gas at the pump. Rather than a user fee to fund the cost of roads, these are designed to shape behavior, discouraging the consumption of products or services that generate emissions, like gasoline.

Whether implemented via a direct excise tax< /a>An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on carbon emissions, fuel standard mandates, a cap-and-trade system, or another environmental program, environmental taxes increase the price of gasoline.

Determining the marginal impact of carbon taxes and environmental programs on the per-gallon price of gas is difficult, as there are several estimates from different sources. State environmental agencies tend to estimate the impact of their programs to be much lower than most economic analyses, for instance. Many environmental programs, like cap-and-trade, also have fluctuating prices and thus a fluctuating impact on gas prices.

When incorporating state environmental programs and taxes into gas tax rates, the range of gas tax rates across the country becomes even wider.

California places the largest additional burden on gas prices via carbon taxes, with California government agencies estimating about 12 cents being passed through from the Low Carbon Fuel Standard (to increase to 47 cents in 2025) and 27 cents being passed through from the state's cap-and-trade program. The exact impact of Washington's Climate Commitment Act is hotly debated, but Ecology officials and supporters of the program admit to about 27 cents of price increases. Oregon 's Clean Fuels Program was estimated to increase gas prices by 9.8 cents, and the Climate Protection Program will likely raise prices further once implemented.

Many northeastern states participate in the Regional Greenhouse Gas Initiative, a regional cap on emissions from power plants. The MassachusettsClean Energy and Climate Plan mandates emission reductions in, and other regulations on, many sectors. New York recently approved a cap-and-invest program, though it is still early in the development process. Estimates of these programs' effects on their respective state's gas prices are limited.

Though gas taxes are intended to serve as user fees and pollution deterrents, they vary widely across states. How does your state's burden compare?

Share

Public link

Please use the above public link if you want to share this noodl on another website.