Sylvie Willis
In the United States, the federal excise tax on diesel fuel is 24.4 cents per gallon, with state and local taxes adding an average of 35.89 cents to that figure. This means that the government makes an average of 60.29 cents per gallon of diesel fuel sold. In 2021, state and local governments collected a combined $53 billion in revenue from motor fuel taxes, with nearly all of this revenue (97%) coming from state motor fuel taxes. While the federal excise tax on diesel fuel has not changed since 1993, states employ various methods to calculate their fuel tax rates, including wholesale price, inflation, and state population growth.
Explore related products
What You'll Learn
Federal tax on diesel fuel
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. The 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. This has resulted in a significant loss of purchasing power for the tax revenue. The National Surface Transportation Infrastructure Financing Commission recommended an increase in the gasoline tax and a reform tying the tax rate to inflation in 2009, but this has not been implemented.
The money raised from federal fuel taxes is used for various purposes. According to a statement by then-Secretary of Transportation Mary Peters in 2007, around 60% of federal gas taxes are allocated for highway and bridge construction. The remaining 40% is directed towards earmarked programs, with a portion going towards mass transit projects. Additionally, the proceeds from the diesel fuel tax partly support the Highway Trust Fund.
In Fiscal Year 2016, federal fuel taxes generated $36.4 billion, with $26.1 billion coming from gasoline taxes and $10.3 billion from diesel and special motor fuel taxes. However, critics argue that a significant portion of the revenue is diverted to government programs and debt servicing unrelated to transportation infrastructure. On the other hand, some researchers note that these diversions occur in both directions, and the current gas taxes and "user fees" are insufficient to cover the full cost of road-related spending.
It is worth noting that, in addition to federal excise taxes, state and local taxes and fees also apply to diesel fuel. As of April 2019, these taxes and fees added an average of 35.89 cents to diesel fuel per gallon, resulting in a total US volume-weighted average fuel tax of 60.29 cents per gallon for diesel. However, it is important to consider that state fuel taxes vary and have undergone numerous revisions over time.
Using Diesel Fuel to Clean Transmission: A Good Idea?
You may want to see also
Explore related products
State tax on diesel fuel
State taxes on diesel fuel in the United States vary across states. As of July 1, 2024, the federal excise tax on diesel fuel was 24.3 cents per gallon, while state taxes include rates of general application such as excise taxes, environmental taxes, special taxes, and inspection fees.
For example, in California, the state tax on diesel fuel was 92.12 cents per gallon, while in Alaska, it was 8.95 cents per gallon. California's high tax rate is likely due to its need for more capital to fund infrastructure and transit projects. On the other hand, Alaska's low tax rate may be due to its smaller population and lower transportation budget.
The purpose of collecting fuel taxes is to fund highway repairs, maintenance, and other government infrastructure projects. Diesel fuel taxes are typically higher than gasoline taxes because diesel vehicles use more roads and pay more for road maintenance. However, some states tax diesel at lower rates than gasoline, and environmental regulations can also affect fuel tax rates. For instance, taxes may be raised to increase diesel rates or gas prices to reduce pollution and encourage the use of alternative fuel options.
In addition to state taxes, there may be county and local taxes on diesel fuel. For instance, Florida levies a relatively high diesel tax, which includes a state tax, inspection fee, local option tax, and pollutants tax.
Best Additives for Diesel: Enhancing Engine Performance
You may want to see also
Explore related products
Local tax on diesel fuel
In the United States, the federal excise tax on diesel fuel is 24.4 cents per gallon. This figure was last updated on October 1, 1993, and has not been adjusted for inflation, which increased by 111% from October 1993 to December 2023. On average, as of April 2019, state and local taxes and fees added 35.89 cents to diesel fuel, for a total US volume-weighted average fuel tax of 60.29 cents per gallon for diesel.
The first state to tax fuel was Oregon, on February 25, 1919, with a tax of 1 cent per gallon. By the following decade, all 48 states, along with the District of Columbia, had introduced a gasoline tax. As of 2021, state and local governments collected a combined $53 billion in revenue from motor fuel taxes, which accounted for 1.3% of general revenue. Nearly all of this motor fuel tax revenue (97%) came from state taxes.
Most states levy per-unit taxes based on the number of gallons of diesel fuel purchased by consumers. However, 22 states and the District of Columbia tie at least a portion of their motor fuel tax rate to variables such as the price of gasoline (wholesale or pump price), inflation, or state population growth. Ten states also levy a general sales tax or gross receipts tax on motor fuel purchases. In California, the prepaid general sales tax is included in the state's per-gallon excise tax rate. The other nine states levy the general sales tax or gross receipts tax separately from the purchase.
State tax rates on diesel fuel vary across the country. In 24 states and the District of Columbia, the tax rates on diesel fuel are the same as those on gasoline. In 19 states, the tax rates on diesel fuel are higher than those on gasoline, while in six states, the rates are lower. As of July 1, 2024, the state taxes on diesel fuel ranged from 8.95 cents per gallon in Alaska to 62.9 cents per gallon in California. The next-highest per-gallon tax rates after California are in Pennsylvania (57.6 cents), Washington (49.4 cents), Illinois (43.4 cents), and Maryland (42.7 cents). These rates include any state excise taxes, as well as any related taxes and fees that the consumer pays at the pump, such as environmental or inspection fees.
Enhancing Diesel Performance: Boosting Octane for Power and Efficiency
You may want to see also
Explore related products
Sales tax on diesel fuel
The US federal excise tax on diesel fuel is 24.3 or 24.4 cents per gallon. This is in addition to the state and local taxes and fees, which add, on average, 35.89 cents to diesel, bringing the total US volume-weighted average fuel tax to 60.29 cents per gallon for diesel fuel.
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. Since 1993, the US federal gasoline tax rate has remained unchanged at 18.4 cents per gallon. However, it is worth noting that this rate is not adjusted for inflation, which increased by 113% from October 1993 to 2023.
In addition to federal excise taxes, state taxes on diesel fuel include rates such as excise taxes, environmental taxes, special taxes, and inspection fees. These rates vary from state to state, with some states having higher taxes than others.
Dyed Diesel, which is typically used off-road, is taxed at the combined statewide sales tax rate, along with any applicable district taxes. A partial exemption certificate is required for this reduced tax rate to be applicable.
While most states exempt gasoline from general sales taxes, several states do collect full or partial sales tax in addition to the excise tax.
Jet Fuel and Diesel: Are They Interchangeable?
You may want to see also
Explore related products
Diesel fuel tax exemptions
In the United States, diesel fuel is taxed at both the federal and state levels. As of July 1, 2024, the federal excise tax on diesel fuel is 24.3 cents per gallon, which includes a Leaking Underground Storage Tank fee of 0.1 cents per gallon. 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.
On top of the federal tax, state and local taxes and fees further increase the total tax burden on diesel fuel. As of April 2019, these additional taxes and fees added an average of 35.89 cents to diesel fuel, resulting in a total US volume-weighted average fuel tax of 60.29 cents per gallon for diesel.
While diesel fuel is generally subject to various taxes, there are certain exemptions and partial exemptions provided by both federal and state laws. For instance, dyed diesel, which is diesel fuel that is dyed to indicate that it is for specific uses and not for on-highway use, is exempt from federal excise taxes unless it is used on highways. Similarly, when used off-road, dyed diesel may be eligible for a partial exemption from state sales tax, provided that the appropriate exemption certificate is obtained.
Additionally, certain agricultural uses of diesel fuel may qualify for tax exemptions or credits. For example, in California, Regulation 1533.2 provides guidelines for the diesel fuel used in farming activities or food processing, which may result in tax exemptions or reductions.
It is important to note that tax laws and exemptions can vary by state and may change over time. Therefore, it is essential to refer to the specific laws and regulations in each jurisdiction to understand the applicable tax exemptions for diesel fuel.
Diesel Fuel Injection: AM Ltd's Expertise in Smethwick
You may want to see also
Frequently asked questions
State and local governments collected a combined $53 billion in revenue from motor fuel taxes in 2021. The federal excise tax on diesel fuel is 24.4 cents per gallon. On average, as of April 2019, state and local taxes added 35.89 cents to diesel, for a total US volume-weighted average fuel tax of 60.29 cents per gallon for diesel.
The federal government dedicates about 85% of federal gasoline excise tax revenues to highways, with the remainder primarily supporting transit. State Transit Assistance, funded through the state sales tax on diesel, makes up the largest share of state funds for transit.
Most states levy per-unit taxes based on how many gallons of diesel fuel a consumer purchases. However, 22 states and the District of Columbia tie at least a portion of their motor fuel tax rate to a variable such as the price of diesel fuel (wholesale or at the pump), inflation, or another metric (e.g. state population growth).
![[OLD VERSION] TurboTax Deluxe 2024 Tax Software, Federal & State Tax Return [PC/MAC Download]](https://m.media-amazon.com/images/I/71UbHaUeeUL._AC_UL320_.jpg)
![[OLD VERSION] TurboTax Home & Business 2024 Tax Software, Federal & State Tax Return [PC/MAC Download]](https://m.media-amazon.com/images/I/71b5aAzdXOL._AC_UL320_.jpg)
![(Old Version) H&R Block Tax Software Deluxe + State 2024 with Refund Bonus Offer (Amazon Exclusive) Win/Mac [PC/Mac Online Code]](https://m.media-amazon.com/images/I/51+fonAXhPL._AC_UL320_.jpg)
