Katerina Swanson
Fuel tax is a combination of federal and state/local taxes. In Montana, the federal tax on gasoline is 18.4 cents per gallon, and the state levies an additional excise tax of 33.3 cents per gallon. Additionally, Montana has a cleanup fee of $0.0075 per gallon on gasoline, special fuel, dyed special fuel, aviation, and jet fuel. This fee is used to reimburse owners of leaky tanks that require cleanup. The state's roads and bridges are primarily funded through these fuel taxes, with federal funding accounting for 88.5% and state/local funding contributing 11.5%.
| Characteristics | Values |
|---|---|
| Entity collecting fuel tax | Montana Department of Transportation (MDT) |
| Where the collected tax money is sent | Department of Environmental Quality (DEQ) for leaking storage tanks |
| Who pays the fuel tax | fuel vendors |
| Who the tax is passed on to | end consumers |
| When is the tax due | 25th of each month for the previous month |
| Federal gasoline tax | 18.4 cents per gallon |
| Montana's additional excise tax | 33.3 cents |
| Aviation fuel tax | $0.04 state excise tax |
| Aviation gasoline (Avgas) tax | $0.194 per gallon |
| Surtax on aviation gasoline used in a fractional ownership program aircraft | $0.141 per gallon |
| Kerosene for use in aviation (Jet fuel) tax | $0.244 per gallon |
| Kerosene tax rate when removed directly from an on-airport terminal (ramp) | $0.219 |
| Where is the revenue from the tax spent | Funding and maintaining a safe transportation system across Montana, including road construction and repair |
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What You'll Learn
The federal tax on fuel in Montana
The federal tax on gasoline in the US was first introduced in 1932 at a rate of 1 cent per gallon. It has since undergone many revisions, with the last increase in 1993. The tax is used to support the Federal Highway Administration, with around 60% of the revenue going towards highway and bridge construction, and the remaining 40% going to earmarked programs, including mass transit projects.
In Montana, the federal and state taxes on fuel are used to support and maintain a safe transportation system across the state. Montana's roads and bridges are funded through a combination of federal (88.5%) and state/local (11.5%) funding sources. The Montana Department of Transportation (MDT) does not receive any funding from Montana's general fund revenue.
There are also some specific tax rules and exemptions in Montana. For example, a fee of $0.0075 is collected on each gallon of gasoline, special fuel, dyed special fuel, aviation, and jet fuel, which is sent to the Department of Environmental Quality (DEQ) for leaking storage tanks. Licensed distributors pay a special fuel license tax to the Department of Transportation, which is then passed down to the customer. There are also some tax exemptions for certain types of dyed special fuel, which is for off-road use and may be used by governmental agencies and in off-highway vehicles/equipment.
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State tax on gasoline
In the United States, state taxes on gasoline have varied throughout history. The first state to tax fuel was Oregon, on February 25, 1919, with a 1 cent/gal tax. In the following decade, all US states introduced a gasoline tax. By 1939, many states levied an average fuel tax of 3.8 cents/gal (1 cent/litre). Since then, state fuel taxes have undergone multiple revisions. As of 2016, 19 states and the District of Columbia have fuel taxes with rates that vary with the price of fuel, inflation rate, vehicle fuel economy, and other factors.
Montana's fuel tax is collected by the Montana Department of Transportation (MDT) and sent to the Department of Environmental Quality (DEQ) for leaking storage tanks. The state levies an additional excise tax of 33.3 cents on top of the federal gasoline tax of 18.4 cents per gallon, making it the 21st highest gas tax rate among states. The average price of a gallon of gas in Montana was $3.39 as of mid-January 2022, the 15th highest price in the country.
The money collected from fuel taxes in Montana is used to support and maintain a safe transportation system across the state. Montana's roads and bridges are funded through a combination of federal (88.5%) and state/local (11.5%) funding sources. The federal government collects taxes from highway users through gasoline and diesel fuel taxes, which are then apportioned to the states through federal highway legislation.
In addition to the gasoline tax, Montana also has a tax on aviation fuel. A fee of $0.0075 is collected on each gallon of gasoline, special fuel, dyed special fuel, aviation, and jet fuel. This fee is separate from the cleanup fee, which is charged for any fuel that comes to rest in a storage tank in Montana (excluding those owned by railroad companies or the military).
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State tax on aviation fuel
In Montana, the price per gallon of fuel includes fuel taxes, which are collected and remitted to the state. These taxes are used to support and maintain a safe transportation system across the state. While the primary excise taxes on fuel in Montana are on gasoline, the state also levies taxes on other types of fuel, including aviation fuel.
Aviation fuel in Montana is subject to a state excise tax of $0.04 per gallon. This tax is paid by fuel vendors and is passed on to consumers in the fuel's retail price. The licensed distributor, who purchases the fuel at the terminal without the tax included, acts as the collector of the state tax for the Montana Department of Transportation (MDT). This distributor remits the tax to the MDT, which then sends it to the Department of Environmental Quality (DEQ) to address leaking storage tanks.
In addition to the state excise tax, aviation fuel in Montana is also subject to a cleanup fee of $0.0075 per gallon. This fee is collected by the MDT and forwarded to the DEQ for leaking storage tanks. The last licensed distributor in the chain is responsible for paying both the tax and the cleanup fee. However, if a licensed distributor exports fuel directly out of Montana, the cleanup fee is not assessed.
It is important to note that the taxation point for aviation fuel in Montana is "at the distributor level". This means that the tax is collected from the licensed distributor, who then passes it on to the consumer through the fuel's retail price. The fuel tax is due on the 25th of each month for the previous month, and fuel producers and vendors are responsible for filing fuel tax reports to the Montana government.
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State tax on diesel
The state tax on diesel fuel in Montana is a complicated topic. Diesel fuel taxes in the United States are typically levied as a fixed number of cents per gallon, though this figure can vary depending on the state and local taxes and fees. In Montana, the taxation point for diesel fuel is "at the distributor level", meaning that licensed distributors are responsible for collecting and remitting the state tax to the Montana Department of Transportation (MDT). While the specific tax rate for diesel fuel in Montana was not explicitly stated in the sources, it is subject to a federal excise tax of 24.4 cents per gallon, which is collected by the manufacturer and remitted to the IRS to support the Federal Highway Administration. On average, state and local taxes add about 35.89 cents to diesel fuel, resulting in a total US volume-weighted average fuel tax per gallon of around 60.29 cents.
In addition to the federal and state taxes on diesel fuel, there are also cleanup fees associated with fuel storage tanks in Montana. Any fuel that comes to rest in a storage tank, with some exceptions, is subject to this fee, which is collected by the Montana Department of Transportation and sent to the Department of Environmental Quality (DEQ) for leaking storage tank cleanup. This fee is very low, at only $0.0075 per gallon of fuel, and functions similarly to the tax, with the last licensed distributor in the chain being responsible for paying both the tax and the cleanup fee.
It is worth noting that the price of fuel in Montana, as in other states, is influenced by various factors, including the price of crude oil, transportation and refining costs, and taxes. While the federal gasoline tax is consistent across the country, state taxes can vary, leading to differences in fuel prices from state to state. As of mid-January 2022, the average price of a gallon of gas in Montana was $3.39, the 15th highest price in the country.
Overall, the state tax on diesel fuel in Montana contributes to the funding and maintenance of a safe transportation system within the state, with federal and state revenues supporting roads and bridges through highway legislation and fuel tax legislation.
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How fuel tax revenue is used
The fuel tax in Montana is collected by the Montana Department of Transportation (MDT) and is used to support and maintain a safe transportation system across the state. The MDT does not receive any funding from Montana's general fund revenue. Instead, Montana's roads and bridges are primarily funded through a combination of federal (88.5%) and state/local (11.5%) funding sources.
The state's portion of funding comes from fuel taxes, gross vehicle weight fees, and other related fees. For example, a fee of $0.0075 is collected on each gallon of gasoline, special fuel, dyed special fuel, aviation, and jet fuel. This fee is sent to the Department of Environmental Quality (DEQ) to address leaking storage tanks. The last licensed distributor in the chain is responsible for paying the tax and cleanup fee, which is passed on to the next licensed distributor if fuel is sold between them.
Additionally, fuel tax revenues contribute to federal highway funding. Federal road and bridge revenues are generated from highway users through gasoline and diesel fuel taxes and are apportioned to states through federal highway legislation.
While fuel vendors make excise tax payments, these taxes are ultimately passed on to end consumers in the fuel's retail price.
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Frequently asked questions
Montana levies an additional excise tax of 33.3 cents per gallon of gasoline, on top of the federal gasoline tax of 18.4 cents per gallon.
Although fuel vendors make the payments, the taxes are passed on in the fuel's retail price.
The money from the fuel tax is used to support and maintain a safe transportation system across Montana.
A fee of $0.0075 is collected on each gallon of gasoline, special fuel, dyed special fuel, aviation, and jet fuel. This fee is collected by the Montana Department of Transportation (MDT) and sent to the Department of Environmental Quality (DEQ) for leaking storage tanks.
Aviation fuel is subject to a state excise tax of $0.04 per gallon.
