Katerina Swanson
In Ohio, fuel taxes are applied to gasoline, diesel, and compressed natural gas (CNG) to fund transportation infrastructure and maintenance. These taxes are collected at the point of sale and are included in the price per gallon that consumers pay at the pump. In addition to (or instead of) traditional sales taxes, gasoline and other fuel products are subject to excise taxes on both the Ohio and Federal levels. Diesel exhaust fuel is subject to sales tax in Ohio, and the state's tax rates are in addition to federal fuel taxes, which are $0.184 per gallon for gasoline and $0.244 per gallon for diesel.
| Characteristics | Values |
|---|---|
| Type of tax | Sales tax, excise tax |
| What it applies to | Gasoline, diesel, compressed natural gas (CNG), dyed diesel fuel |
| Who pays | Fuel vendors, not end consumers |
| When it's paid | On the last day of each month for the previous month |
| Where the revenue goes | Maintenance and development of Ohio's highways, roads, and bridges |
| Federal excise tax rate | $0.184 per gallon for gasoline, $0.244 per gallon for diesel |
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What You'll Learn
Diesel fuel tax rates in Ohio
In Ohio, fuel taxes are applied to gasoline, diesel, and compressed natural gas (CNG) to fund transportation infrastructure and maintenance. These taxes are collected at the point of sale and included in the price per gallon that consumers pay at the pump. The revenue generated from these taxes is allocated to the maintenance and development of Ohio's highways, roads, and bridges. It's important to note that these state tax rates are separate from federal fuel taxes.
As of July 1, 2019, the federal fuel tax rate for diesel fuel was $0.244 per gallon. While I cannot find the specific diesel fuel tax rate for Ohio, in most areas, state and federal excise taxes amount to about 13% of the cost of a gallon of gas. Additionally, there is a 0.1 ¢ per gallon charge included in the diesel fuel rate for the Leaking Underground Storage Tank Trust Fund (LUST).
It's worth noting that fuel excise taxes are paid by fuel vendors and producers, who then pass the cost on to consumers in the fuel's retail price. Fuel tax is due on the last day of each month for the previous month, and fuel vendors and producers are responsible for filing fuel tax reports to the Ohio government.
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Federal excise tax on diesel
In the United States, the federal excise tax on diesel fuel is 24.4 cents per gallon. This tax has not been adjusted since 1 October 1993, and it is not indexed to inflation, which increased by 111% from October 1993 to December 2023. The revenue generated from diesel fuel taxes is used to fund transportation-related programs, such as improving infrastructure, and airport and Air Traffic Control operations by the Federal Aviation Administration (FAA).
In Ohio, diesel fuel is subject to both state and federal excise taxes. The state excise tax on diesel fuel in Ohio is 28 cents per gallon, which is higher than most other states. This tax is included in the pump price at all gas stations in the state. The state excise tax is paid by fuel vendors and producers, who then pass the cost on to the end consumer in the retail price of the fuel.
While the federal excise tax on diesel fuel is uniform across the country, it is important to note that the total tax rate on diesel fuel in Ohio may be higher than in other states due to the additional state excise tax. Additionally, in certain circumstances, such as after Hurricane Katrina, temporary provisions may be implemented to waive penalties for using dyed diesel fuel on highways as long as the standard tax rate is imposed.
The proceeds from the federal excise tax on diesel fuel contribute significantly to the country's transportation infrastructure. However, some policy advisors argue that an increase in the tax rate is necessary to keep up with the growing costs of infrastructure construction and the improved fuel efficiency of vehicles. This proposal suggests a 15-cent increase in the diesel tax to address the decline in the purchasing power of fixed-rate gas taxes.
Unlike the Ohio Sales Tax, the federal excise tax on diesel fuel is generally not deductible on Ohio income tax returns or federal tax returns. However, there have been exceptions in specific tax years, such as for excise taxes paid on long-distance phone calls between 2003 and 2006. Additionally, certain incentives may allow for the refund of federal excise taxes on goods bought for particular purposes, but these policies are subject to frequent changes.
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State tax on dyed diesel
In Ohio, fuel taxes are applied to gasoline, diesel, and compressed natural gas (CNG) to fund transportation infrastructure and maintenance. These state tax rates are in addition to federal fuel taxes, which are $0.184 per gallon for gasoline and $0.244 per gallon for diesel. The federal fuel tax on diesel includes a 0.1 ¢ per gallon charge for the Leaking Underground Storage Tank Trust Fund (LUST).
In California, dyed diesel is taxed at the combined statewide sales tax rate, plus applicable district taxes when used off-road. However, it is not subject to excise taxes unless used on a highway. California and its political subdivisions, such as school districts and city municipalities, can purchase dyed diesel fuel for on-highway use, but they must register to report and pay the excise tax on dyed diesel fuel used on public highways.
In Texas, there is a $0.20 per gallon tax on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or for other taxable uses not exempted by law. Suppliers and importers can apply a 2% discount on this tax if paid by the due date, while distributors and importers receive a 1.75% discount. A penalty of $200 is assessed for each subsequent sale of tax-free diesel fuel that is not reported within 180 days of the due date of the original report of the sale.
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Tax on diesel fuel for vessels
In Ohio, fuel taxes are applied to gasoline, diesel, and compressed natural gas (CNG) to fund transportation infrastructure and maintenance. These taxes are collected at the point of sale and included in the price per gallon that consumers pay at the pump. The revenue generated from these taxes is allocated to the maintenance and development of Ohio's highways, roads, and bridges.
In addition to traditional sales taxes, gasoline and other fuel products are subject to excise taxes on both the Ohio state and federal levels. Excise taxes on fuel are implemented by every state, similar to taxes on alcohol and tobacco products. While the primary excise taxes on fuel in Ohio are on gasoline, most states also tax other types of fuel. For example, aviation fuel is subject to a state excise tax.
Payments for fuel excise taxes are made by fuel vendors and are included in the fuel's retail price. Fuel tax is due on the last day of each month for the previous month. Fuel producers and vendors in Ohio are responsible for filing various fuel tax reports with the state government.
According to the Ohio Revised Code, "motor vehicles" include all vehicles, vessels, watercraft, engines, machines, or mechanical contrivances powered by internal combustion engines or motors. "Motor fuel" refers to gasoline, diesel fuel, kerosene, compressed natural gas, or any other liquid motor fuel, excluding substances prepackaged and sold in containers of five gallons or less. "Diesel fuel" means any liquid fuel capable of being used in discrete form or as a blend component in the operation of diesel engines.
In the context of tax laws, the term "consumer" refers to a buyer of motor fuel for purposes other than resale. The sale of diesel fuel by a motor fuel dealer for consumption in operating a vessel is included in the tax laws. However, the use of dyed diesel fuel in a vessel within the state's boundaries may qualify for a refund under specific conditions outlined in the Revised Code.
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Penalties for misuse of dyed diesel
In Ohio, dyed diesel is for off-road use only. Using dyed diesel on the road is illegal and can result in fines. The fine for the illegal use of dyed diesel is $10/gallon or $1,000 per violation, whichever is greater. For example, if a tank with 20 gallons of red diesel is discovered, the fine will be $1,000. Two such tanks will result in a $2,000 fine. After the first violation, each subsequent one will increase the penalty by $1,000 compared to the previous violation, so the total penalty amount depends on the number of violations.
Dyed diesel is non-exempt and used for non-taxable purposes such as agriculture or construction equipment. The federal government requires the dyeing of untaxed diesel fuel to help reduce tax evasion and air pollution. The vehicle operator is responsible for ensuring the vehicle is properly fuelled. Any visible dye in the diesel fuel disqualifies that product from use in a highway vehicle.
To avoid buying red diesel illegally, pay attention to pump labels and the fuel itself, and try to buy it from reputable suppliers. It is a requirement of the IRS that all pumps dispensing any dyed fuel must be labelled with a special inscription: "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE".
In the past, there have been instances where penalty relief was provided for the use of dyed diesel fuel on highways. In September 2005, due to shortages of clear diesel fuel caused by Hurricane Katrina, the Ohio Tax Commissioner announced that no penalties would be imposed when dyed diesel fuel is sold or used on the highway as long as a tax of 28 cents per gallon was paid on such fuel. This relief was available to any person selling or using dyed fuel for highway use until September 15, 2005.
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Frequently asked questions
Yes, there is a sales tax on diesel exhaust fuel in Ohio.
The federal fuel tax rate for diesel in Ohio is $0.244 per gallon. This is in addition to state taxes, which vary across the state.
Yes, there are some exemptions. For example, dyed diesel fuel is exempt from tax when used for non-highway purposes, such as farming or home heating. However, if this fuel is then used for highway vehicles or vessels, the purchaser becomes liable for the tax.
Fuel vendors are responsible for paying the excise tax and filing the relevant reports to the Ohio government. However, these costs are passed on to the consumer in the retail price of the fuel.
Fuel taxes are implemented to generate revenue for transportation infrastructure and maintenance, including highways, roads, and bridges. They also serve as user fees and pollution deterrents.
