Eleven states imposing fuel tax changes July 1
July 1 will bring fuel tax rate changes in nearly a quarter of states across the country.
Automatic tax rate changes range from a 3.2-cent increase on Connecticut diesel to a 2.3-cent decrease on Kentucky gas and diesel.
California
Yet another round of fuel rate increases in California takes effect the first of the month. The automatic increases are to keep up with inflation.
For the past year, excise tax collected on gas purchases has been set at 57.9 cents and the diesel rate at 44.1 cents. As of July 1, the excise tax on gas will increase 1.7 cents per gallon to 59.6 cents.
The diesel excise tax in the Golden State will increase 1.3 cents per gallon to 45.4 cents.
Gov. Gavin Newsom has repeatedly pointed the finger at oil companies as the reason for the state’s high fuel prices.
In 2023, he signed into law a bill to implement price gouging rules for oil companies.
New tax rates for motor vehicle fuel and diesel fuels start July 1, 2024. The rates are adjusted based on the percentage change in the California Consumer Price Index as calculated by the Department of Finance: https://t.co/LhzPX1NGJ0 pic.twitter.com/V5MXK5s8u8
— CDTFA (@cdtfa) June 21, 2024
Colorado
In Colorado, the excise rates on gas and diesel are set to increase.
The 57.9-cent gas tax will increase 1.7 cents to 59.6 cents. The 44.1-cent diesel tax will increase 1.3 cents to 45.4 cents.
The changes are the result of a 2021 state law touted by Gov. Jared Polis to “future proof’ the state’s transportation funding system. The $5.4 billion transportation funding law created a new set of road-user fees to benefit highways, transit and electric vehicle infrastructure.
New fees and existing fees were indexed to inflation or to the national highway construction costs index.
As a result, road usage fees assessed on gas and diesel purchases will increase one penny, from 3 cents to 4 cents. An additional fee applied solely to diesel sales also will increase from 3 cents to 4 cents.
The per-gallon fee on gasoline and diesel is used to pay for road usage, and the fee on diesel only for vehicles’ “impacts on bridges and tunnels.”
Connecticut
For the first time in more than a year, Connecticut’s diesel tax rate is on the way up.
In 2023, the state froze the tax rate to avoid an expected 12-cent hike attributed to wholesale diesel prices more than doubling from the previous year.
Diesel in the state is taxed following an annual formula that includes a fixed base and an adjustment that takes into account the average wholesale diesel prices from the prior year.
Starting July 1, the 49.2-cent diesel tax rate will rise 3.2 cents per gallon to 52.4 cents.
Meanwhile, the state’s 25-cent gas tax rate has not changed since July 2000.
Illinois
Fuel tax rates in Illinois are again on their way up.
A five-year-old capital plan approved by state lawmakers included a component tying fuel rates to inflation. As a result, the rates change on an annual basis.
The diesel and gas rates each will increase 1.6 cents, to 54.5 cents and 47 cents.
Since 2019, the diesel rate is up 33 cents from 21.5 cents. The gas rate is up 28 cents from 19 cents.
In the past year, the Illinois State Comptroller’s office reported the state has collected $2.7 billion in fuel taxes.
Indiana
A scheduled increase also is set to take effect in Indiana.
For the past year, the excise rates on gas and diesel have been set at 35 cents and 58 cents. Starting July 1, the rates each will increase by a penny, to 36 cents and 59 cents.
The changes are tied to state law that requires annual rate adjustments through 2027. Adjustments made each July 1 are capped at one penny.
Kentucky
Meanwhile, across the state line in Kentucky, a fuel tax dip is coming.
The diesel and gas rates now are 30.1 cents and 25.7 cents.
Statute links the state fuel taxes to the average wholesale price of fuel. As a result, when the price goes up, the tax rate follows. On the other hand, a decline results in a corresponding price dip.
At the first of the month, both tax rates are set to decrease by 2.3 cents, to 27.8 cents and 23.4 cents.
Maryland
Fuel tax rates in Maryland also are headed down. Specifically, the gas tax and the diesel tax each will decrease by 0.9 cents.
The changes set for the first of the month are due to a decade-old inflation indexing law that includes two components. Maryland law authorizes fuel rates to be adjusted each July based on the consumer price index and the retail price for fuel.
As a result, the gas tax will decrease from 47 cents to 46.1 cents. The diesel rate will dip from 47.75 cents to 46.85 cents.
Despite the slight price decrease, both tax rates are up 10 cents over three years.
Missouri
In Missouri, the first of July marks the fourth of five annual increases to the state’s fuel tax rate.
A 2021 law put in place regular increases to the state’s then 17-cent fuel tax rate. The tax is slated to increase by 12.5 cents to 29.5 cents through July 2025.
The first 2.5-cent increase took effect in October 2021. The second increase took effect the following July. The third increase of the same amount was implemented July 1, 2023. At that time, both the gas and diesel rates were set at 24.5 cents.
The latest increase will bring the state rate up from 24.5 cents to 27 cents.
Missouri motorists are permitted to file refund claims for reimbursement of the additional tax amounts.
Statehouse pursuits have failed to gain passage that would extend the refund offering to all Missouri vehicle owners, including truck drivers.
Nebraska
Starting July 1, a fuel tax increase will take effect in Nebraska.
The 29.1-cent gas and diesel excise rate will increase by one-half cent to 29.6 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 increase in the state’s tax rates is a result of increased fuel prices and a six-month adjustment in the wholesale tax rate.
Another recalculation is set for Jan. 1, 2025.
New Jersey
New Jersey’s gas and diesel tax rates also are on the rise.
Gov. Phil Murphy earlier this year signed into law a bill to raise fuel tax collections.
The state fuel rate includes two components: a petroleum products gross receipt tax and a motor fuels tax.
Since October 2023, the petroleum products gross receipt tax has been set at 31.8 cents for gas and 35.8 cents for diesel.
Additionally, the motor fuels tax rate on gas is 10.5 cents. The diesel rate is 13.5 cents.
The total tax rates for gas and diesel are 42.3 cents and 49.3 cents.
Starting July 1, an annual 1.9-cent-per-gallon fuel tax increase will be imposed through July 2028. At that time, the gas rate will be 51.8 cents, and the diesel rate will be 58.8 cents.
Virginia
In Virginia, the gas and diesel excise rates are up the first of the month. The 29.8-cent excise rate on gas will increase by a penny to 30.8 cents.
The 30.8-cent diesel rate will increase to 31.8 cents.
Additionally, the wholesale sales tax on fuels is increasing. The gas rate will increase from 8.7 cents to 9 cents. The diesel rate will rise from 8.8 cents to 9.1 cents.
The combined taxes will bring the state’s gas tax to 38.5 cents and the diesel tax to 39.9 cents.
The tax rate changes are due to indexing to annual changes in the consumer price index. LL