Fuel tax changes implemented in 15 states

August-September 2019

Keith Goble


Since the first of July, fuel tax collection changes have been made in more than one dozen states. The tax rate changes range from a 24.5-cent increase on diesel fuel in Illinois to a fractional price increase for gas and diesel in Nebraska.


Another fuel rate increase in California now is in effect.

Excise tax collected on gas purchases has been set at 41.7 cents and the diesel rate at 36 cents. As of July 1 the gas rate increased by 5.6 cents per gallon to 47.1 cents.

The diesel fuel tax in the Golden State remains unchanged.

The latest increase to gas is part of a 2017 transportation funding deal that raised the excise tax on diesel by 20 cents and gas by 12 cents. Vehicle fee increases were also included in the funding deal.

The 10-year, $52 billion transportation funding deal – SB1 – signed by then-Gov. Jerry Brown is touted to benefit local roads, trade corridors and public transit. With the exception of the tax on diesel fuel sales, all tax and fee rates also are slated to be indexed to inflation starting July 1, 2020.


The state’s diesel fuel tax rate is up. The 43.9-cent excise rate increased by 2.6 cents to 46.5 cents per gallon for the next year.

The gas tax is unchanged at 25 cents.


Fuel tax rates in Illinois have doubled.

The state has collected 19 cents on each gallon of gas sold and 21.5 cents on diesel. As part of a $45 billion capital plan approved by the General Assembly the state’s fuel tax rates were increased July 1 to 38 cents for gas and 45.5 cents for diesel.

“The Rebuild Illinois plan will reinvigorate our economy and strengthen our rightful status as the transportation and supply chain hub of the nation,” Gov. J.B. Pritzker said in recent remarks.

The fuel tax rates also are tied to inflation.


The state of Indiana’s fuel tax rates also are rising. A 2017 state law increased the gas and diesel rates by 10 cents to 28 cents. Tax rates were also indexed on an annual basis through 2024. Annual adjustments are capped at one penny.

As a result, this year’s increase for gas and diesel is 1 cent, to 30 cents per gallon for gas and 49 cents for diesel.


The 32.5-cent diesel rate in Iowa will remain the same for the sixth straight year. The gas tax, however, is headed down by 0.2 cents to 30.5 cents.

The rates are based on a fuel distribution percentage formula.


Fuel tax rates in Maryland are headed up. Specifically, the gas tax increased by 1.4 cents and the diesel rate increased by 1.35 cents.

The changes are due to a five-year-old inflation indexing law. The gas tax now is set at 36.7 cents while the diesel rate is 37.45 cents.


The latest round of fuel tax increases from a 2017 Michigan law raised rates by less than a penny.

Specifically, the gas rate is 14.8 cents – up 0.1 cents from 14.7 cents. The diesel rate is 16 cents – up 0.2 cents from 15.8 cents.


A three-year-old Montana law continues to raise gas and diesel tax rates.

The 31.5-cent gas tax increased by 0.5 cents and the 29.3-cent diesel rate increased by 0.2 cents. The increases are part of phased-in tax increases through 2022. At that time, the diesel tax rate will have increased a total of 2 cents to 29.75 cents and the gas tax will be up a total of 6 cents to 33 cents.


A fractional increase is imposed in Nebraska.

The 29.6-cent gas and diesel rate increased by 0.1 cents to 29.7 cents. The change is due to a law linking the state rates to the price of fuel.

The state tax is made up of three components: the variable tax, fixed tax and wholesale tax. The variable and wholesale rates are adjusted twice annually. A separate petroleum release remedial action fee is not included in the state tax rates.

The fractional increase in the state’s tax rates is a result of steady fuel prices and a six-month adjustment in the wholesale tax rate.


Approved as part of a two-year transportation budget deal in Ohio, the state’s fuel tax rates are up.

The 28-cent gas tax was raised by 10.5 cents to 38.5 cents. The diesel rate increased by 19 cents to 47 cents.

Rhode Island

An indexing formula resulted in gas and diesel excise tax rates increasing by 1 cent.

The formula permits tax rates to be modified every two years. The last tax rate change occurred in 2015.

The latest increase raises the gas and diesel excise rate to 34 cents per gallon – up from 33 cents.

South Carolina

The 20-cent diesel and gas excise rate collected in South Carolina is up by 2 cents. The change to 22 cents follows a 2017 state law to impose increases of 2 cents annually through 2022. At that time, the tax rate will top out at 28 cents.


In Tennessee, the state’s 25-cent excise rate on gas and 24-cent diesel rate were raised for the third time in as many years. The gas tax is up 1 cent from a year ago to 26 cents, and the diesel tax is up three cents to 27 cents.

The raised taxes mark the third round in a three-year annual tax increase approved by state lawmakers.


Motorists in Vermont are paying more in gas taxes. The state’s 31.2-cent tax rate increased by 0.55 cents to 31.75 cents because of a rule linking the tax to the price of gas, and an increase in gas prices.

The state’s 32-cent diesel rate is unchanged.


An additional tax is being collected on truckers and others traveling along the state’s busiest highway.

Approved by the Virginia Legislature and Gov. Ralph Northam earlier this year, the sales tax rates collected on fuel purchases have been increased along the Interstate 81 corridor.

The previous sales tax rate collected on diesel is 20.3 cents and the gas rate was 16.2 cents.

Since July 1, the new law has resulted in a 2.1% increase in the regional motor fuel taxes along the corridor and surrounding counties. The change equate to an additional 7.7 cents per gallon collected on diesel purchases and an additional 7.6 cents collected on gas purchases.

As a result, the sales tax rate on diesel has risen to 28 cents and the gas rate has increased to 23.8 cents. LL


Keith Goble

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.