Sylvie Willis
Fuel tax rates vary across the United States, with some states levying sales taxes, excise taxes per gallon, and taxes on wholesalers or retailers. The federal excise tax on gasoline is 18.4 cents per gallon, and 24.4 cents per gallon for diesel fuel. These rates have not changed since 1993 and are not indexed to inflation. As of 2016, 19 states and the District of Columbia have fuel taxes that vary with the price of fuel, inflation rate, vehicle fuel economy, and other factors. The first US state to tax fuel was Oregon, introducing a 1 cent/gal tax in 1919. California has the highest gas tax rate at 68.1 cents per gallon, while Alaska has the lowest at 8.95 cents per gallon.
| Characteristics | Values |
|---|---|
| Federal excise tax on gasoline | 18.4 cents per gallon |
| Federal excise tax on diesel fuel | 24.4 cents per gallon |
| Leaking Underground Storage Tank fee | 0.1 cents per gallon |
| State taxes | Vary across states, with the highest being California at 68.1 cents per gallon and the lowest being Alaska at 8.95 cents per gallon |
| Aviation gasoline tax | $0.194 per gallon |
| Aviation gasoline surtax | $0.141 per gallon |
| Kerosene tax for aviation | $0.244 per gallon |
| Kerosene tax for non-commercial aviation | $0.219 per gallon |
| Highest state tax on aviation fuel | Massachusetts at $0.335 / gallon |
| Lowest state tax on aviation fuel | Oklahoma at $0.0008 / gallon |
| Highest state tax on jet fuel | DC at $0.235 / gallon |
| Lowest state tax on jet fuel | Oklahoma at $0.0008 / gallon |
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What You'll Learn
Federal tax on gasoline
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. This price has not changed since 1993 and is not indexed to inflation, which increased by 111% from October 1993 to December 2023. The first federal gasoline tax in the United States was created on June 6, 1932, with the enactment of the Revenue Act of 1932, which taxed 1 cent per gallon.
Most states exempt gasoline from general sales taxes, but several states collect full or partial sales tax in addition to the excise tax. Sales tax is not reflected in the rates. The price advertised on pumps and stations' signs includes all taxes, unlike most other goods in the US.
Federal fuel taxes raised $36.4 billion in Fiscal Year 2016, with $26.1 billion raised from gasoline taxes and $10.3 billion raised from diesel and special motor fuel taxes. Some policy advisors believe an increased tax is needed to fund and sustain the country's transportation infrastructure, including mass transit. About 60% of federal gas taxes are used for highway and bridge construction, with the remaining 40% going to earmarked programs, including a minority for mass transit projects.
Revenues from other taxes are also used in federal transportation programs. Critics of gas tax increases argue that much of the revenue is diverted to other government programs and debt servicing unrelated to transportation infrastructure. However, researchers have noted that these diversions occur in both directions, and the gas taxes and "user fees" paid by drivers do not cover the full cost of road-related spending.
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State tax on gasoline
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. This federal tax was last raised on October 1, 1993, and has not been adjusted for inflation, which increased by 111% from October 1993 to December 2023. The proceeds from this tax partly support the Highway Trust Fund, with about 60% of the funds going into highway and bridge construction, and the remaining 40% being used for earmarked programs, including mass transit projects.
State taxes on gasoline include rates of general application, such as excise taxes, environmental taxes, special taxes, and inspection fees. These state taxes do not include county and local taxes or state taxes based on gross or net receipts. As of April 2019, state and local taxes and fees added an average of 34.24 cents to gasoline and 35.89 cents to diesel. This brings the total US volume-weighted average fuel tax to 52.64 cents per gallon for gasoline and 60.29 cents per gallon for diesel.
The first US state to tax fuel was Oregon, on February 25, 1919, with a 1 cent per gallon tax. By 1939, the average state fuel tax had risen to 3.8 cents per gallon. Since then, state fuel taxes have undergone numerous revisions, and as of 2016, 19 states and the District of Columbia have fuel taxes that vary with factors such as the price of fuel, inflation, and vehicle fuel economy.
The American Petroleum Institute calculates a weighted average of local taxes by municipality population to determine an average tax for each state. This takes into account the varying population sizes and fuel consumption in each state. As a result, many of the states with the highest taxes also have higher populations, and more states overall have below-average taxes. While most states exempt gasoline from general sales taxes, several states collect full or partial sales tax in addition to the excise tax.
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Aviation fuel tax rates
The aviation community has long contributed to the national air transportation system through a "fuel tax." General aviation pays a tax on jet fuel and aviation gasoline, currently set at 21.9 cents per gallon and 19.4 cents per gallon, respectively. These taxes are efficiently collected by the government at the point of purchase, without the need for a large bureaucracy.
Aviation gasoline, or Avgas, is taxed at a lower rate of $0.194 per gallon. When used in a fractional ownership program, aviation gasoline is subject to a surtax of $0.141 per gallon, bringing the total tax closer to that of jet fuel.
These fuel taxes provide a stable and predictable source of revenue for the FAA and are seen as a fair way to charge operators based on their use of the aviation system. They also incentivize the purchase of newer, more fuel-efficient aircraft, helping to reduce noise and congestion.
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Jet fuel tax rates
Jet fuel, or kerosene for use in aviation, is generally taxed at $0.244 per gallon in the United States. However, if the kerosene is taken directly from an on-airport terminal (ramp) and placed into the fuel tank of an aircraft for non-commercial aviation, the tax rate is $0.219. The District of Columbia has the highest tax rate on jet fuel at $0.235 per gallon, while Oklahoma has the lowest at $0.0008 per gallon. Revenues from jet fuel taxes primarily fund airport and Air Traffic Control operations by the Federal Aviation Administration (FAA).
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. State and local taxes and fees add, on average, 34.24 cents to gasoline and 35.89 cents to diesel, resulting in a total US volume-weighted average fuel tax of 52.64 cents per gallon for gasoline and 60.29 cents per gallon for diesel. The first federal gasoline tax in the country was established on June 6, 1932, with the enactment of the Revenue Act of 1932, which taxed 1 cent per gallon (0.3 cents per litre). The US federal gasoline tax has remained unchanged since 1993 and has not been adjusted for inflation, which increased by 111% from October 1993 to December 2023.
Some policy advisors advocate for an increased fuel tax to fund and maintain the country's transportation infrastructure, including mass transit. They argue that as infrastructure construction costs have risen and vehicles have become more fuel-efficient, the purchasing power of the fixed-rate gas tax has decreased. On the other hand, critics of gas tax increases argue that much of the revenue is diverted to unrelated government programmes and debt servicing.
While most fuel taxes were initially levied as a fixed number of cents per gallon, as of 2016, 19 states and the District of Columbia have implemented fuel taxes that fluctuate with changes in the price of fuel, inflation rates, vehicle fuel economy, and other factors.
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Excise tax
In addition to the federal excise tax, state and local excise taxes are also levied on fuel. These taxes vary across states and are applied in different ways. Some states have a fixed excise tax per gallon, while others have taxes that vary with the price of fuel, inflation rate, vehicle fuel economy, or other factors. As of April 2019, state and local taxes and fees added an average of 34.24 cents to gasoline and 35.89 cents to diesel. California had the highest tax rate at $0.596 per gallon, followed by Pennsylvania at $0.576 per gallon. On the other hand, Oklahoma had the lowest tax rate on aviation and jet fuel at $0.0008 per gallon.
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Frequently asked questions
The federal tax on gasoline in the USA is 18.4 cents per gallon.
State and local taxes and fees add an average of 34.24 cents to gasoline, according to figures from April 2019. However, this varies across states. For instance, California has a gas tax rate of 68.1 cents per gallon, while Pennsylvania's rate is 57.6 cents per gallon.
The federal excise tax on diesel fuel is 24.4 cents per gallon.
State and local taxes and fees add an average of 35.89 cents to diesel fuel, according to figures from April 2019.
