Mercedes Mullins
The amount of tax revenue collected from fuel taxes varies across the United States. As of 2025, Alaska has the lowest tax rate on gasoline ($0.0895/gallon), while California has the highest ($0.6982/gallon). States with higher populations tend to have higher tax rates, but this is not always the case. For example, California has a high population and a high tax rate, while Alaska has a low population and a low tax rate. In contrast, Hawaii has a relatively low population but a higher tax rate of $0.185/gallon. The variation in tax rates across states is due to differences in state and local tax policies, as well as the volume of fuel sold. Some states, such as Maryland, have also tied their tax rates to annual inflation, resulting in fluctuations over time.
How much does each state take in from fuel tax?
| Characteristics | Values |
|---|---|
| Federal excise tax on gasoline | 18.4 cents per gallon |
| Federal excise tax on diesel fuel | 24.4 cents per gallon |
| Federal tax on aviation gasoline | $0.194 per gallon |
| Federal tax on aviation gasoline used in fractional ownership program aircraft | $0.141 per gallon |
| Federal tax on kerosene for use in aviation | $0.244 per gallon |
| Federal tax on kerosene removed directly from an on-airport terminal | $0.219 per gallon |
| State with the lowest tax rate on gasoline | Alaska ($0.0895 per gallon) |
| State with the highest tax rate on gasoline | California ($0.6982 per gallon) |
| State with the highest tax rate on aviation fuel | Massachusetts ($0.335 per gallon) |
| State with the highest tax rate on jet fuel | DC ($0.235 per gallon) |
| State with the lowest tax rate on aviation fuel | Oklahoma ($0.0008 per gallon) |
| State with the lowest tax rate on jet fuel | Oklahoma ($0.0008 per gallon) |
| State with the second-highest tax rate on gasoline | Illinois ($0.6610 per gallon) |
| State with the third-highest tax rate on gasoline | Pennsylvania ($0.5870 per gallon) |
| State with the fourth-highest tax rate on gasoline | Washington ($0.494 per gallon) |
| State with the fifth-highest tax rate on gasoline | Maryland ($0.4610 per gallon) |
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What You'll Learn
Federal tax on gasoline
The federal tax on gasoline in the United States is currently 18.4 cents per gallon, and 24.4 cents per gallon for diesel fuel. This includes a Leaking Underground Storage Tank fee of 0.1 cents per gallon on both fuels. The federal tax was last raised on October 1, 1993, and is not adjusted for inflation, which has increased by about 113% since 1993. The first federal gasoline tax in the US was created on June 6, 1932, with the enactment of the Revenue Act of 1932, which taxed 1 cent per gallon.
The proceeds from the tax partly support the Highway Trust Fund, with about 60% of federal gas taxes used for highway and bridge construction. The remaining 40% goes to earmarked programs, including a minority for mass transit projects. However, revenues from other taxes are also used in federal transportation programs. Federal fuel taxes raised $36.4 billion in Fiscal Year 2016, with $26.1 billion raised from gasoline taxes and $10.3 billion from diesel and special motor fuel taxes.
Some policy advisors believe that an increased tax is necessary to fund and sustain the country's transportation infrastructure, especially as vehicles have become more fuel-efficient, and the purchasing power of fixed-rate gas taxes has declined. In February 2009, The National Surface Transportation Infrastructure Financing Commission recommended a 10-cent increase in the gasoline tax, a 15-cent increase in the diesel tax, and a reform tying both of these tax rates to inflation. However, critics argue that much of the revenue from increased gas taxes is diverted to unrelated government programs and debt servicing.
In addition to the federal tax, all states and the District of Columbia also tax motor fuels. Per-gallon gas tax rates vary from state to state, ranging from 8.95 cents in Alaska to 62.9 cents in California.
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State tax rates
The three states with the lowest gasoline tax rates are Alaska ($0.0895), Mississippi ($0.1840), and Hawaii ($0.1850). In contrast, the three states with the highest gasoline tax rates are California ($0.6982), Illinois ($0.6610), and Pennsylvania ($0.5870). These three states also have the highest diesel tax rates.
Some states have unique tax rates for certain fuels. For instance, Massachusetts has the highest tax rate for aviation fuel at $0.335 per gallon, while Oklahoma has the lowest at $0.0008 per gallon. Similarly, DC has the highest tax rate for jet fuel at $0.235 per gallon, while Oklahoma has the lowest at $0.0008 per gallon.
In recent years, several states have made changes to their gas tax rates. Between 2013 and 2021, 33 states and the District of Columbia enacted legislation to increase their gas tax rates. On the other hand, Connecticut, Florida, Georgia, Maryland, and New York temporarily suspended their gas taxes in 2022 due to rising gasoline prices. Illinois and Kentucky also halted scheduled gas tax rate increases.
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Aviation fuel tax
Forty states impose an excise tax on aviation fuels, with Massachusetts imposing the highest excise tax on aviation fuel at a rate of 38 cents per gallon, and the District of Columbia imposing the highest excise tax on jet fuel at a rate of 23.5 cents per gallon. Some states include jet fuel in their sales tax base, while others assess an excise tax separately, or both. In Colorado, for example, aviation fuel is subject to an excise tax unless purchased by a commercial airline, and a 2.9% sales tax applies to jet fuel sold to direct air carriers, scheduled air carriers, and commuter and on-demand carriers.
In addition to fuel taxes, airlines and their customers pay various special taxes and fees to different authorities for purposes such as homeland security, environmental protection, infrastructure enhancement, and airport operations and maintenance.
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Jet fuel tax
In the United States, jet fuel is generally taxed at $0.244 per gallon, unless a reduced rate of $0.219 per gallon applies. This reduced rate is for kerosene used in non-commercial aviation, which is removed directly from an on-airport terminal and placed into the fuel tank of an aircraft. Commercial operations are taxed at a lower rate of 4.4 cents per gallon.
State-level jet fuel taxes vary across the country. For instance, North Carolina imposes a 7% combined general rate of sales and use tax on jet fuel. In Colorado, jet fuel is subject to a 2.9% sales tax when sold to direct air carriers, scheduled air carriers, and commuter and on-demand carriers. Additionally, Colorado's excise tax is levied on jet fuel at the wholesale level when it is imported into the state or purchased at an airport terminal.
Massachusetts has the highest excise tax on aviation fuel at 38 cents per gallon, while the District of Columbia has the highest excise tax on jet fuel specifically, at a rate of 23.5 cents per gallon. In some states, jet fuel is included in the sales tax base, while others levy an excise tax separately, or in some cases, both.
In certain cases, refunds or exemptions from jet fuel taxes may apply. For example, commercial airlines in Colorado are exempt from paying aviation fuel excise taxes. Additionally, a refund of up to 50% may be claimed for excise taxes paid on aviation fuels used to operate state-licensed agricultural aircraft from private landing facilities. In Massachusetts, if jet fuel is resold to the United States government for military use, a refund can be claimed for the jet fuel tax paid.
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Gas tax holidays
The effectiveness of gas tax holidays in providing long-term relief has been debated. While they can lead to a temporary decrease in gasoline prices, critics argue that they are merely a "quick fix" that does not address the underlying issues of high oil prices and foreign oil dependency. Additionally, it is challenging to determine the direct impact of gas tax holidays on prices due to the involvement of various factors in pricing schemes, such as the cost of crude oil, refining and distribution costs, and profits.
Research has shown that during gas tax holidays, a portion of the tax savings is passed on to consumers in the form of lower gas prices. However, these reductions may not be sustained throughout the entire holiday period. For example, in Maryland, 72% of tax savings were passed on to consumers, while in Georgia, it ranged from 58% to 65%, and in Connecticut, it was between 71% and 87%.
Suspending the federal gas tax has been a topic of discussion among policymakers, including President Biden. However, critics argue that the savings for consumers might be minimal, and there is no guarantee that these savings will benefit taxpayers. Additionally, suspending the federal gas tax could reduce federal tax revenue, impacting funding for critical infrastructure projects.
Some states have considered alternative measures to provide relief from rising gasoline prices. These include keeping state gasoline taxes constant or lowering them, distributing gasoline cards and public transport vouchers, and providing gasoline tax rebates.
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Frequently asked questions
The federal tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel.
State and local governments collected a combined $53 billion in revenue from motor fuel taxes in 2021.
The three states with the highest gasoline taxes are California ($0.6982/gal), Illinois ($0.6610/gal), and Pennsylvania ($0.5870/gal).
The three states with the lowest gasoline tax are Alaska ($0.0895/gal), Mississippi ($0.1840/gal), and Hawaii ($0.1850/gal).
The first US state to tax fuel was Oregon on February 25, 1919, with a 1¢/gal tax. The first federal gasoline tax in the US was created on June 6, 1932, with the enactment of the Revenue Act of 1932, taxing 1¢/gal.
