Ameer Randolph
Illinois has some of the highest gas tax rates in the US, with rates varying based on the type of fuel. The state's gas tax is tied to the Consumer Price Index, a measure of inflation's impact on the price of goods. In 2025, the diesel fuel tax rate was set at $0.545 per gallon, with an annual increase planned for July 1, 2025, taking the total tax to over 48 cents per gallon. Illinois lawmakers have also proposed a vehicle mileage tax, citing concerns about the funding for road maintenance and construction projects.
| Characteristics | Values |
|---|---|
| Date of tax increase | July 1, 2025 |
| Type of fuel | Diesel |
| Previous tax rate | $0.545 per gallon |
| New tax rate | $0.483 cents per gallon |
| Percentage increase | 2.69% |
| Absolute increase | $0.062 per gallon |
| Illinois' rank among states | 2nd highest |
| Additional notes | Illinois is considering a vehicle mileage tax |
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What You'll Learn
Illinois' diesel fuel tax is set at $0.545 per gallon
Illinois has some of the highest fuel tax rates in the country. As of July 1, 2024, the state's diesel fuel tax rate is set at $0.545 per gallon, while the tax on unleaded fuel is $0.47 per gallon. This rate is valid until December 31, 2024.
The Illinois Department of Revenue determines the Part B rate of the Motor Fuel Use Tax for diesel fuel, gasoline, gasohol, liquefied petroleum gas (LPG), compressed natural gas (CNG), and liquefied natural gas (LNG). The Part B rate is calculated annually on January 1, based on the average selling price per gallon of motor fuel in Illinois over the previous 12 months, multiplied by 6.25%.
The state's fuel tax rates have been increasing over the years, with the governor doubling the motor fuel taxes per gallon since 2018. The tax rate for diesel fuel in Illinois is higher than the rate for unleaded fuel, which is typically more commonly used. This difference in taxation may be due to several factors, such as the state's efforts to promote the use of cleaner fuels or to generate revenue for infrastructure projects.
Additionally, Illinois has considered implementing a vehicle mileage tax to address the concern that the state is not receiving sufficient funding for road maintenance and construction. This proposed tax would be based on the actual miles driven rather than the amount of fuel consumed. The discussion around this potential tax shift highlights the state's focus on generating revenue for roadway maintenance and construction, especially with the increasing popularity of electric and hybrid vehicles, which contribute to roadway wear and tear without paying gasoline taxes.
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Illinois' gas tax is the second-highest in the US
Illinois has the second-highest gas tax in the US, with motorists paying a total of 84 to 85.5 cents per gallon in taxes. This is an increase from the previous rate of 19 cents per gallon, which was doubled by Governor J.B. Pritzker in 2019. The current rate includes the state's gas tax, sales taxes, and a variety of taxes and fees assessed to wholesalers and retailers that are then passed on to consumers.
The high gas tax in Illinois has led to some residents, particularly those near state borders, seeking out-of-state alternatives for fuelling their vehicles. For example, drivers in neighbouring states like Michigan, Ohio, and Missouri pay significantly less in gas taxes, with rates of 18, 27, and 39 cents less per gallon, respectively.
The gas tax in Illinois is adjusted annually based on inflation and other factors. During Fiscal Year 2025, which runs from July 1, 2024, to June 30, 2025, the gas tax rate for unleaded fuel is set at $0.47 per gallon, while the diesel fuel tax is $0.545 per gallon. The state's gas tax is tied to the Consumer Price Index, allowing for automatic tax increases without the need for voting by state lawmakers.
While the high gas tax in Illinois has been a source of frustration for many residents, it is important to note that the state also has additional costs associated with vehicle ownership, such as registration fees and other charges. These combined costs can significantly impact the finances of motorists in Illinois, especially those from middle- to lower-income families.
The regressive nature of gas taxes means that lower-income families are disproportionately affected, as they spend a larger portion of their budget on fuel costs. Additionally, the increase in gas taxes may not be offset by a corresponding decrease in other areas, further contributing to the financial burden on Illinois residents.
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Illinois' gas tax is tied to the Consumer Price Index
The gas tax in Illinois is set at $0.47 per gallon on unleaded fuel and $0.545 per gallon on diesel fuel for Fiscal Year 2025, which runs from July 1, 2024, to June 30, 2025. Illinois has the second-highest gas tax rate in the country, with a total of $0.665 per gallon in taxes and other fees on fuel.
The Illinois Department of Revenue determines the Part B rate of the Motor Fuel Use Tax for diesel fuel, gasoline, gasohol, liquefied petroleum gas (LPG), compressed natural gas (CNG), and liquefied natural gas (LNG). The Part B rate is set annually on January 1 and is calculated by multiplying the average selling price per gallon of motor fuel sold in Illinois over the previous 12 months by 6.25%.
The proposed budget for Fiscal Year 2026 suggests that the gas tax will increase by approximately 2.69%, or 1.3 cents per gallon, resulting in a tax rate of $0.483 cents per gallon. This increase is attributed to ongoing budget negotiations in Springfield, with lawmakers considering the impact of improved fuel efficiency and the growing use of electric and hybrid vehicles on fuel tax revenues.
Illinois lawmakers have also proposed a vehicle mileage tax, as the state believes it is not receiving sufficient funding for road maintenance and construction. This proposal aims to address the non-neutral treatment of vehicles with different fuel efficiencies and ensure that drivers pay for road usage.
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Illinois drivers will spend an extra $143 per year
Illinois drivers are facing yet another increase in fuel tax, which will come into effect on July 1, 2025. This annual increase will see the tax on fuel rise to 48.3 cents per gallon, or $0.483 per gallon. This is an increase of 1.3 cents per gallon, or approximately 2.69%.
The state's fuel tax is already the second-highest in the nation, and this latest hike will further impact motorists' wallets. The increase will affect both unleaded and diesel fuel, with the diesel fuel tax set at $0.545 per gallon for Fiscal Year 2025.
The tax adjustment is calculated based on the Consumer Price Index, a measure of inflation's impact on the price of goods. This base calculation is then used to determine the proposed increase, which is included in the state's budget proposal.
Illinois drivers will feel the pinch as they will now be spending an extra $143 per year on average. This is a significant increase, especially when coupled with the existing high property taxes in the state. It is no wonder that polling suggests around 50% of Illinois residents would leave the state if they could.
There are also discussions around implementing a vehicle mileage tax in Illinois, as there is a concern that the state is not receiving sufficient funds for road maintenance and repairs. With the increasing popularity of electric and hybrid vehicles, which are more fuel-efficient, there may be a decline in fuel tax revenue. However, these vehicles still contribute to road usage and wear and tear, so a mileage tax could be one way to address this issue.
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Illinois is considering a vehicle mileage tax
Illinois has some of the highest gas taxes in the country. As of July 1, 2024, the state's gas tax is set at $0.47 per gallon for unleaded fuel and $0.545 per gallon for diesel fuel. Illinois' gas tax is tied to the Consumer Price Index (CPI), a measure of inflation's impact on the price of goods.
Illinois lawmakers are now considering a vehicle mileage tax. This is because they argue that the state is not receiving sufficient funds for road maintenance and construction. As vehicles become more fuel-efficient, and with the increasing popularity of electric and hybrid vehicles, the state is concerned that it will have less money to fund road projects.
A vehicle mileage tax, or a tax based on actual miles driven, could ensure that drivers pay for the roads they use. This would mean that all drivers, including those with fuel-efficient or electric vehicles, contribute to road maintenance and construction. Such a tax could also encourage drivers to reduce their vehicle mileage, thereby decreasing emissions and improving fuel efficiency.
However, it is unclear whether this bill will be debated or passed into law. Illinois residents already face high property taxes and gas taxes, and 50% of residents have stated that they would leave the state if they could. A vehicle mileage tax could be an additional financial burden for residents, particularly those who rely on their vehicles for work or other essential activities.
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Frequently asked questions
Yes, Illinois raised the gas tax on diesel fuel to $0.545 per gallon during Fiscal Year 2025, which runs from July 1, 2024, to June 30, 2025.
The gas tax rate on unleaded fuel in Illinois for Fiscal Year 2025 is $0.47 per gallon.
According to the Tax Foundation, Illinois assesses a total of $0.665 per gallon in taxes and fees on fuel, making it the second-highest rate in the country.
The increase in the gas tax is due to provisions of a bill passed in 2019 that ties the state's gas tax to the Consumer Price Index, a measure of inflation's impact on the price of goods.
