Sylvie Willis
The amount of tax on a gallon of fuel varies widely across the world. In the United States, the federal government adds a 0.1 cent per gallon fee to its motor fuel taxes to remediate leaking underground storage tanks, and federal taxes include excise taxes of 18.3 or 18.4 cents per gallon on gasoline and 24.3 or 24.4 cents per gallon on diesel fuel. However, state taxes can add a significant amount to the overall price of fuel, with some states charging as much as 68.1 cents per gallon in taxes. These state taxes include excise taxes, sales taxes, environmental taxes, and inspection fees. In other countries, the tax on a gallon of fuel can vary based on the price of fuel, the inflation rate, vehicle fuel-economy, or other factors.
| Characteristics | Values |
|---|---|
| Federal tax on gasoline | 18.3 cents per gallon (as of July 1, 2024) |
| Federal tax on diesel fuel | 24.3 cents per gallon (as of July 1, 2024) |
| Leaking Underground Storage Tank fee | 0.1 cents per gallon on gasoline and diesel fuel (as of July 1, 2024) |
| State with the highest tax rate on gasoline | California: 68.1 cents per gallon (cpg) or $0.596/gallon |
| State with the second-highest tax rate on gasoline | Pennsylvania: 58.7 cpg or $0.576/gallon |
| State with the lowest tax rate on gasoline | Alaska: 8.95 cpg or $0.0895/gallon |
| State with the highest tax rate on diesel | Pennsylvania: $0.741/gallon |
| State with the lowest tax rate on diesel | Alaska: $0.0895/gallon |
| State with the highest tax rate on aviation fuel | Massachusetts: $0.335/gallon |
| State with the lowest tax rate on aviation fuel | Oklahoma: $0.0008/gallon |
| State with the highest tax rate on jet fuel | DC: $0.235/gallon |
| State with the lowest tax rate on jet fuel | Oklahoma: $0.0008/gallon |
| State with the highest combined state and local taxes and fees | Pennsylvania: 70 cents per gallon for gasoline and 89.7 cents per gallon for diesel |
| State with fluctuating tax rates | New York, North Carolina, Vermont, and Michigan |
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Federal tax on gasoline
The federal tax on gasoline in the United States is 18.4 cents per gallon, and it has remained unchanged since 1993. This federal excise tax is not paid directly by drivers but is included in the gasoline price at the pump. The tax is not adjusted annually for inflation, and there have been calls for an increase to fund infrastructure projects.
The federal tax on gasoline is just one component of the total tax burden on fuel, which also includes state and local taxes and fees. State taxes on gasoline vary widely across the United States and are levied in different ways, including sales taxes, excise taxes per gallon, and taxes on wholesalers or retailers. For example, California has one of the highest gas tax rates at 68.1 cents per gallon, while Alaska has one of the lowest at 8.95 cents per gallon.
The proceeds from the federal gasoline excise tax are used to support the Highway Trust Fund, with about 60% of the funds going towards highway and bridge construction. The remaining 40% is allocated to earmarked programs, including a portion for mass transit projects. In total, federal fuel taxes raised $36.4 billion in Fiscal Year 2016, with $26.1 billion coming from gasoline taxes.
While the federal gasoline tax has not changed since 1993, there have been adjustments to state fuel taxes over the years. Some states adjust their fuel taxes annually or quarterly, while others have implemented reforms to tie their tax rates to inflation. Additionally, environmental programs and taxes, such as cap-and-trade systems, can further impact the price of gasoline and widen the range of gas tax rates across the country.
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State tax rates
California has the highest gas tax rate as of 2024, at 68.1 cents per gallon, followed by Illinois (66.5 cents per gallon) and Pennsylvania (58.7 cents per gallon). California's high tax rate is due in part to its carbon tax, which adds an estimated 12 cents to the price of gasoline. The lowest gas tax rates are in Alaska (8.95 cents per gallon), Mississippi (18.4 cents per gallon), and Hawaii (18.5 cents per gallon).
Some states adjust their fuel taxes annually. For example, New York and North Carolina make annual adjustments to their tax rates, and in 2025, both states reduced their gas tax rates slightly. Vermont also adjusts its "motor fuel transportation infrastructure assessment" fee quarterly, and Michigan revises its prepaid sales tax rate monthly.
Other states have recently increased their gas tax rates. As of January 1, 2024, Florida, Georgia, Massachusetts, Minnesota, Nebraska, New Jersey, and Utah all raised their tax rates, with increases ranging from less than 1 cent to 3.3 cents per gallon.
In addition to the variation in tax rates across states, the impact of taxes on the price of gasoline can also be influenced by cap-and-trade carbon policies or low-carbon fuel standards, which further increase prices in California, Washington, and some northeastern states.
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Environmental taxes
State environmental taxes are levied in addition to other state-level taxes, such as sales taxes and excise taxes. While the specific impact of environmental taxes on the per-gallon price of fuel is challenging to determine due to fluctuating prices and varying estimates, they undoubtedly contribute to the overall tax burden.
For example, in Minnesota, drivers pay about 2.1 cents per gallon in environmental fees, which are separate from the state excise tax. In Nebraska, while the state motor fuel tax rate rose by eight-tenths of a cent, the total state taxes also include a small environmental fee. Similarly, in New York, environmental fees are included in the overall state taxes on fuel, amounting to about 32.9 cents per gallon.
California, known for its progressive environmental policies, imposes the largest additional burden on gas prices through its carbon taxes. The state's Low Carbon Fuel Standard is estimated to add about 12 cents to the per-gallon price of gas, with a projected increase to 47 cents in 2025. These environmental taxes are designed to encourage the use of cleaner energy sources and reduce the state's carbon footprint.
The impact of environmental taxes on fuel prices can vary across states due to factors such as cap-and-trade carbon policies and low carbon fuel standards. These policies drive prices even higher in certain states, such as California, Washington, and select northeastern states. Overall, environmental taxes are an essential component of the fuel tax structure, reflecting a commitment to addressing the environmental consequences of fuel consumption.
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Excise taxes
State excise taxes on fuel vary across the country, with California having the highest rate on gasoline at 68.1 cents per gallon or $0.596/gallon, and Pennsylvania having the highest rate on diesel at $0.741/gallon. The lowest excise tax rates on gasoline and diesel are in Alaska, at 8.95 cents per gallon or $0.0895/gallon for both fuels. Some states, such as New York, North Carolina, and Vermont, adjust their fuel taxes annually or quarterly, while others, like Minnesota, Nebraska, New Jersey, and Utah, have recently raised their tax rates.
The impact of excise taxes on fuel prices can be significant, especially when combined with other fees and taxes, such as environmental taxes and inspection fees. These taxes and fees can add up to an average of 33.3 cents per gallon in state taxes, according to one analysis. Excise taxes are also subject to changes in the price of fuel, inflation rates, and other factors, which can further impact the overall price of fuel for consumers.
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Sales taxes
The price of fuel advertised at the pump includes all taxes. While most states exempt gasoline from general sales taxes, several states collect full or partial sales tax in addition to the excise tax. For example, in New York, drivers pay a sales tax of 8 cents per gallon in addition to an 8-cent excise tax and other environmental fees, totaling about 32.9 cents per gallon in state taxes. In Nebraska, drivers pay a state motor fuels tax of 30.4 cents per gallon, excluding a small environmental fee, totaling 31.3 cents per gallon in state taxes.
Gas taxes are intended to serve as user fees and pollution deterrents, but they vary widely across states. States with the highest tax rates on gasoline include California at $0.596/gallon, followed by Pennsylvania at $0.576/gallon. On the other hand, Alaska has the lowest tax rate on gasoline at $0.0895/gallon. These rates do not include the effects of cap-and-trade carbon policies or low carbon fuel standards, which further increase prices in certain states.
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Frequently asked questions
The US federal excise tax on gasoline is 18.3 or 18.4 cents per gallon. On top of this, states levy multiple taxes and fees, which vary across states. These include excise taxes, sales taxes, environmental taxes, and inspection fees. These add up to an average of 33.3 or 34.24 cents per gallon in state taxes.
California has the highest tax rate on gasoline at 68.1 cents per gallon or $0.596 per gallon.
Alaska has the lowest tax rate on gasoline at 8.95 cents per gallon or $0.0895 per gallon.
The federal tax on diesel fuel is 24.3 or 24.4 cents per gallon.
In New York, drivers pay state taxes of about 32.9 cents per gallon of gas.
