Ameer Randolph
The United States federal excise tax on diesel fuel is currently set at 24.4 cents per gallon. This tax rate was last raised in 1993 and has remained unchanged since, without adjustments for inflation. The proceeds from the diesel fuel tax contribute to the Highway Trust Fund, which is used for highway construction, maintenance, and investment in mass transit. Additionally, a small portion of the tax revenue is allocated to the Leaking Underground Storage Tank Trust Fund. While the federal excise tax rate is uniform across the country, state and local taxes can vary, resulting in different total tax amounts for diesel fuel in different states.
| Characteristics | Values |
|---|---|
| Federal excise tax rate on diesel fuel | 24.4 cents per gallon |
| Federal excise tax rate on gasoline | 18.4 cents per gallon |
| Kerosene tax rate for non-commercial aviation | $0.219 per gallon |
| Kerosene tax rate for commercial aviation | $0.244 per gallon |
| Year of the last change in federal tax rate | 1993 |
| Inflation adjustment | No |
| Total amount raised by federal fuel taxes in Fiscal Year 2016 | $36.4 billion |
| Amount raised from diesel and special motor fuel taxes in Fiscal Year 2016 | $10.3 billion |
Explore related products
$108.99
What You'll Learn
Federal excise tax on diesel fuel is $0.244 per gallon
The federal excise tax on diesel fuel is $0.244 per gallon. This rate has remained unchanged since 1 October 1993, and is not indexed to inflation. The tax revenues are credited to the Highway Trust Fund, which is used for highway construction and maintenance, as well as investment in mass transit.
The federal excise tax on gasoline is lower, at $0.184 per gallon. The total US volume-weighted average fuel tax is $0.5264 per gallon for gasoline and $0.6029 per gallon for diesel.
The federal excise tax rates on motor fuels have been a topic of discussion for policy advisors and the National Surface Transportation Infrastructure Financing Commission. Some believe that an increase in the tax is necessary to fund and sustain the country's transportation infrastructure. In February 2009, the National Surface Transportation Infrastructure Financing Commission recommended a 15-cent increase in the diesel tax.
The first federal gasoline tax in the United States was created on 6 June 1932, with the enactment of the Revenue Act of 1932, which taxed $0.01 per gallon. Oregon became the first US state to tax fuel on 25 February 1919, with a tax rate of $0.01 per gallon.
Diesel Fuel Costs in Australia: Understanding the Price Tag
You may want to see also
Explore related products
The tax funds highway construction and maintenance
The federal excise tax on diesel fuel in the United States is currently set at 24.4 cents per gallon. This tax rate has remained unchanged since 1993 and is not indexed to inflation, which has since increased by 111% as of December 2023. As a result, the purchasing power of the fixed-rate diesel tax has declined over time.
The revenues generated from the diesel excise tax are credited to the Highway Trust Fund, which is responsible for funding highway construction and maintenance, as well as investment in mass transit. In Fiscal Year 2016, federal fuel taxes raised $36.4 billion, with $10.3 billion coming from diesel and special motor fuel taxes.
The Highway Trust Fund plays a crucial role in sustaining the country's transportation infrastructure. However, with the rising costs of infrastructure construction and the increasing fuel efficiency of vehicles, there have been calls for an increase in the diesel tax rate. Some policy advisors and the National Surface Transportation Infrastructure Financing Commission have recommended raising the diesel tax by 15 cents per gallon to address the loss of purchasing power and adequately fund transportation infrastructure projects.
While the federal excise tax on diesel fuel contributes significantly to the Highway Trust Fund, it is important to note that state and local taxes and fees also play a role in funding highway construction and maintenance. On average, as of April 2019, state and local taxes add 35.89 cents to the price of diesel fuel per gallon. These taxes vary by state, with some states collecting full or partial sales tax in addition to the excise tax.
Eradicating Thick Algae from Diesel: A Comprehensive Guide
You may want to see also
Explore related products
$49.39 $51.99
The federal tax rate hasn't changed since 1993
The US federal tax rate on gasoline has remained unchanged since 1 October 1993, at 18.4 cents per gallon (4.86 cents per litre). The federal tax rate on diesel fuel is also unchanged since the same date, remaining at 24.4 cents per gallon. While the federal tax rate has not changed, inflation has increased by 111% from October 1993 to December 2023. This means that the real value of the tax revenue collected has declined over time.
The US federal tax on gasoline was first introduced on 6 June 1932 with the enactment of the Revenue Act of 1932, which taxed gasoline at 1 cent per gallon (0.3 cents per litre). Since 1993, the federal tax rate on gasoline has not been adjusted for inflation, which rose to 113% in 2023. This means that the real value of the tax revenue collected in 2023 was significantly less than it was in 1993.
Similarly, the federal tax rate on diesel fuel has not kept pace with inflation. While the tax rate has remained constant, the cost of living has increased significantly. This has resulted in a decrease in the purchasing power of the tax revenue collected. In other words, the same tax rate now yields less real money than it did in 1993. This phenomenon is not unique to diesel fuel taxes; it applies to any fixed-rate tax that is not adjusted for inflation.
Some policy advisors and organisations, such as the National Surface Transportation Infrastructure Financing Commission, have recognised this issue and proposed solutions. In February 2009, the commission recommended increasing the gasoline tax by 10 cents and the diesel tax by 15 cents. These increases would help fund and sustain the country's transportation infrastructure, including mass transit. Additionally, the Congressional Budget Office has suggested indexing the fuel taxes for inflation, ensuring that the tax rates keep pace with changes in the cost of living.
The Weight of 250 Gallons of Diesel Fuel
You may want to see also
Explore related products
$35 $79
State and local taxes add an average of $0.3589 to diesel
The United States federal excise tax on diesel fuel is 24.4 cents per gallon. This rate has remained unchanged since 1 October 1993 and is not indexed to inflation. The revenues from these taxes are credited to the Highway Trust Fund, which is used for highway construction and maintenance, as well as investment in mass transit.
State and local taxes, on the other hand, add an average of $0.3589 to diesel. This figure is calculated by the American Petroleum Institute, which uses a weighted average of local taxes by municipality population to determine an average tax for each state. This means that states with higher populations and higher taxes have a greater impact on the national average.
The first state to tax fuel was Oregon, which introduced a 1 cent per gallon tax in 1919. Within the following decade, all of the US states (48 at the time) and the District of Columbia had followed suit. By 1939, many states levied an average fuel tax of 3.8 cents per gallon. Since then, state fuel taxes have undergone numerous revisions.
It is worth noting that some states collect full or partial sales tax in addition to the excise tax, further increasing the total tax burden on diesel fuel. These additional sales taxes are not reflected in the average state and local tax figure of $0.3589.
The combined federal, state, and local taxes result in a volume-weighted average fuel tax of 60.29 cents per gallon for diesel fuel in the United States as of April 2019.
Get a Diesel Fuel Card: Easy, Efficient, and Effective
You may want to see also
Explore related products
$12.49 $21.99
Kerosene aviation fuel is taxed at $0.244 per gallon
The United States federal excise tax on diesel fuel is 24.4 cents per gallon. This rate has not changed since 1993 and is not indexed to inflation, which increased by 111% from October 1993 to December 2023. State and local taxes and fees further add to the overall tax on diesel fuel, which varies by state.
The tax on kerosene aviation fuel primarily funds airport and Air Traffic Control operations through the Federal Aviation Administration (FAA). Commercial aviation, which involves transporting people or property by air for payment, is subject to additional tax considerations. For instance, if kerosene is removed directly into the fuel tank of an aircraft for commercial aviation, the operator is liable for a tax of $0.044 per gallon. However, the position holder is liable for the LUST tax if the kerosene is used in exempt aviation, such as for military aircraft.
It is worth noting that some states have fuel taxes that vary based on factors such as fuel price, inflation rate, and vehicle fuel economy. As a result, the overall tax on diesel fuel and kerosene aviation fuel can differ across the United States.
Bleeding Air from Diesel Fuel System: Step-by-Step Guide
You may want to see also
Frequently asked questions
The federal excise tax on diesel fuel in the US is 24.4 cents per gallon.
The federal excise tax rate on diesel fuel has been unchanged since 1 October 1993. However, there have been calls for an increase in the tax rate to fund and sustain the country's transportation infrastructure.
The federal excise tax on gasoline is 18.4 cents per gallon, which is lower than the tax on diesel fuel.
