Regan Brown
Fuel tax is a mandatory payment collected by governments from individuals and businesses to fund government services, goods, and activities. The price of fuel includes all taxes, with federal fuel taxes raising $36.4 billion in Fiscal Year 2016. The US federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. State taxes add to the overall price of fuel, with California's gas tax being the highest at 68.1 cents per gallon.
Explore related products
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. The tax was last raised on October 1, 1993, and has remained unchanged since then. This amount is not indexed to inflation, which increased by 111% from October 1993 to December 2023. The purchasing power of fixed-rate gas taxes has declined due to rising infrastructure construction costs and improvements in vehicle fuel efficiency.
The federal excise tax on gasoline is used to fund transportation infrastructure projects. About 60% of federal gas taxes are used for highway and bridge construction, with the remaining 40% going to earmarked programs, including mass transit projects. Additionally, proceeds from the tax partly support the Highway Trust Fund. In Fiscal Year 2016, federal fuel taxes raised $36.4 billion, with $26.1 billion coming from gasoline taxes.
Some policy advisors and researchers advocate for an increased tax to fund and sustain transportation infrastructure and encourage reduced consumption, while critics argue that revenue is diverted to unrelated government programs. The National Surface Transportation Infrastructure Financing Commission issued a report in February 2009 recommending a 10-cent increase in the gasoline tax and a reform tying the rate to inflation.
State and local taxes and fees further add to the total fuel tax. As of April 2019, the US volume-weighted average fuel tax was 52.64 cents per gallon for gasoline and 60.29 cents per gallon for diesel. However, individual states have varying tax rates, with California having the highest gas tax of 68.1 cents per gallon, while Alaska has the lowest rate at 8.95 cents per gallon.
Fuel Injection Service: Cost and Benefits Explained
You may want to see also
Explore related products
State tax on gasoline
State taxes on gasoline in the United States vary across states and are calculated in a few different ways. These include sales taxes, excise taxes per gallon purchased at the pump, and taxes on wholesalers or retailers, which are generally passed on to consumers via increased prices.
The federal tax on gasoline is 18.4 cents per gallon, and most states levy multiple taxes and fees on top of this. These include excise taxes, sales taxes, environmental taxes, and inspection fees. The average state tax is around 33 cents per gallon, resulting in a combined federal and state tax of about 51.7 cents per gallon. However, this varies significantly by state. For example, California has the highest gas tax rate at 68.1 cents per gallon, while Alaska has the lowest at 8.95 or 9 cents per gallon.
Some states have considered replacing their gas taxes with vehicle miles traveled (VMT) taxes, which would use actual miles driven as the metric for the user fee instead of gas consumed. This would ensure that drivers, including those with electric vehicles, pay for the roads they use. Additionally, some states have implemented or considered environmental taxes or carbon taxes, which are designed to discourage the consumption of products that generate emissions.
The price advertised at gas pumps in the US includes all taxes, unlike most other goods. Federal gas taxes are used for highway and bridge construction and maintenance, as well as for earmarked programs, including mass transit projects. However, critics argue that much of the revenue is diverted to other government programs unrelated to transportation infrastructure.
Idling Semis: How Much Fuel Do They Guzzle?
You may want to see also
Explore related products
Excise tax
In the United States, the federal excise tax on gasoline is 18.4 cents per gallon, while it is 24.4 cents per gallon for diesel fuel. These rates have remained unchanged since 1993 and are not indexed to inflation. Additionally, states may also levy their own excise taxes on fuel, which can vary across the country. For example, as of 2024, California had the highest gas tax rate at 68.1 cents per gallon, while Alaska had the lowest rate at 8.95 cents per gallon. Excise taxes on fuel are intended to provide funds for highway repair and maintenance, as well as other government infrastructure projects.
The proceeds from excise taxes on fuel partly support the Highway Trust Fund, with about 60% of the taxes being used for highway and bridge construction. The remaining funds go towards earmarked programs, including mass transit projects. Excise taxes on fuel have been a source of debate, with some arguing for an increase to fund transportation infrastructure, while others criticise the diversion of funds to unrelated government programs.
Fuel Transportation: How Much Can You Carry?
You may want to see also
Explore related products
Sales tax
The sales tax on fuel is known as an excise tax, which is a tax imposed on a specific good. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting. In the United States, the federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. This does not include state and local taxes, which can add an average of 34.24 cents to gasoline and 35.89 cents to diesel. The first federal gasoline tax in the United States was created on June 6, 1932, and taxed 1 cent per gallon. The tax has not been adjusted for inflation and has remained unchanged since 1993.
Some states, such as California, Illinois, and Pennsylvania, have higher gas tax rates, while others, such as Alaska, Mississippi, and Hawaii, have lower rates. The tax rates vary widely across states, and some states collect full or partial sales tax in addition to the excise tax. For example, California has a gas tax rate of 68.1 cents per gallon, while Alaska has a rate of 8.95 cents per gallon.
Aviation gasoline (Avgas) is taxed at $0.194 per gallon, with a surtax of $0.141 per gallon when used in a fractional ownership program aircraft. Kerosene for use in aviation (jet fuel) is generally taxed at $0.244 per gallon, with a reduced rate of $0.219 when removed directly from an on-airport terminal into the fuel tank of an aircraft for non-commercial aviation.
The proceeds from the excise tax on gasoline and diesel fuel partly support the Highway Trust Fund, with about 60% of the taxes used for highway and bridge construction. Some believe that an increased fuel tax could encourage less consumption and reduce a country's dependence on foreign oil, while also providing additional funding for transportation infrastructure. However, critics argue that much of the revenue from fuel taxes is diverted to other government programs unrelated to transportation.
The Fuel Consumption of Rockets: How Much Do They Use?
You may want to see also
Explore related products
Environmental tax
The price of fuel includes various taxes, which are levied by federal, state, and local governments. The federal government imposes an excise tax on gasoline and diesel fuel, which is currently set at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. This federal excise tax was first introduced in 1932 and has remained unchanged since 1993. Additionally, there is a Leaking Underground Storage Tank fee of 0.1 cents per gallon for both fuels.
State governments also levy taxes on fuel, which can include sales taxes, excise taxes per gallon, and taxes on wholesalers or retailers, ultimately passed on to consumers as higher prices. Environmental taxes are a type of excise tax implemented by some states, specifically targeting carbon emissions or fuel standards. These environmental taxes increase the price of gasoline but can be challenging to quantify due to fluctuating prices and varying estimates.
The impact of environmental taxes on fuel prices is complex. While they can encourage less consumption and reduce dependence on foreign oil, critics argue that revenue diversion occurs, with funds directed towards unrelated government programs. Additionally, the current structure of fuel taxes may not adequately account for vehicle emissions, as cleaner vehicles are often less responsive to changes in fuel prices. However, research suggests that drivers of dirtier vehicles are more responsive to fuel price changes, indicating a potential environmental benefit from higher fuel taxes.
Some states with higher populations have higher fuel taxes, contributing to a volume-weighted average fuel tax across the country. As of April 2019, the US average fuel tax was 52.64 cents per gallon for gasoline and 60.29 cents per gallon for diesel, including state and federal taxes. California had the highest gas tax rate at 68.1 cents per gallon, while Alaska had the lowest at 8.95 cents per gallon. These rates do not include the impact of cap-and-trade carbon policies or low carbon fuel standards, further influencing fuel prices in certain states.
Fuel Fundamentals: How Much to Collect for a Fire?
You may want to see also
Frequently asked questions
The US federal excise tax on fuel is 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. On top of this, state and local taxes and fees add an average of 34.24 cents to gasoline and 35.89 cents to diesel. However, these rates vary across states. For example, California pumps up its gas tax the most at 68.1 cents per gallon, while Alaska has the lowest rate at 8.95 cents per gallon.
Fuel tax is 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 fuel. Most states levy per-unit taxes, meaning the consumer pays tax based on the number of gallons purchased rather than a percentage of the final purchase price.
Fuel taxes are used to fund and sustain the country's transportation infrastructure, including highway repair, bridge construction, and mass transit. Some researchers argue that an increased fuel cost would encourage less consumption and reduce America's dependence on foreign oil.
![The Administration of Gasoline Tax Refunds and Exemptions [microform]](https://m.media-amazon.com/images/I/61DrX+VgknL._AC_UL320_.jpg)
