Fuel rate changes implemented in 15 states on July 1

June 28, 2019

Keith Goble

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The first of July marks changes in fuel tax collections in more than one dozen states. The tax rate changes range from a 21.5-cent increase on diesel in Illinois to a fractional price increase for gas and diesel in Nebraska.

California

Another fuel rate increase in California is set to take effect the first of the month.

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

The diesel tax in the Golden State will remain unchanged.

The latest increase to gas is part of a 2017 transportation funding deal that raised the excise tax on diesel and gas by 20 cents and 12 cents, respectively. 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.

Connecticut

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

The gas tax will remain unchanged at 25 cents.

Illinois

Fuel tax rates in Illinois are on the verge of doubling.

The state now collects 19 cents on each gallon of gas sold and 21.5 cents on diesel. The tax rates are unchanged since 1990.

As part of a $45 billion capital plan approved by the General Assembly the state’s fuel tax rates will increase July 1 to 38 cents and 45.5 cents, respectively.

“The Rebuild Illinois plan will reinvigorate our economy and strengthen our rightful status as the transportation and supply chain hub of the nation,” Pritzker said in prepared remarks following the bill’s passage.

The fuel tax rates will also be tied to inflation.

Indiana

The state of Indiana’s fuel tax rates also are on the rise. 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 and 49 cents per gallon.

Iowa

The 32.5-cent diesel rate will remain the same for the six 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.

Maryland

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

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

Michigan

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

Specifically, the gas rate will increase on July 1 to 14.8 cents – up 0.1 cents from 14.7 cents. The diesel rate will be raised to 16 cents – up 0.2 cents from 15.8 cents.

Montana

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

The 31.5-cent gas tax will be raised by 0.5 cents and 29.3-cent diesel rate will be 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.

The tax increases will eventually raise an estimated $49 million annually for state and local roadways.

Nebraska

Starting July 1, a fractional increase will be imposed in Nebraska.

The 29.6-cent gas and diesel rate will increase 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.

Ohio

Approved as part of a two-year transportation budget deal in Ohio, the state’s fuel tax rates are slated to increase on July 1.

The 28-cent gas tax will be raised 10.5 cents to 38.5 cents. The diesel rate will increase by 19 cents to 47 cents.

The Ohio Department of Transportation says each penny increase in the fuel tax will result in additional $67 million annually. The state DOT will receive 55 percent of the new revenue and local governments will claim the rest.

The Ohio Constitution requires fuel tax revenue to be used solely for road and bridge work.

Rhode Island

An indexing formula will result 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 will raise 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 going 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.

The South Carolina Department of Transportation has collected about $200 million the first two years of the tax increase. It is estimated an additional $70 million will be collected in the next year. When fully implemented, the tax is estimated to raise more than $600 million annually.

Tennessee

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

The raised taxes mark the third round in a three-year annual tax increase approved by state lawmakers. The increases are expected to raise an additional $250 million per year.

Vermont

Motorists in Vermont will pay more in gas taxes. The state’s 31.2-cent tax rate will increase 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.

Virginia

An additional tax soon will be 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 will increase along the Interstate 81 corridor.

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

In effect July 1, the new law will result in a 2.1 percent increase in the regional motor fuel taxes along the corridor and surrounding counties. The change will 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 will rise to 28 cents and the gas rate will increase to 23.8 cents. The changes are estimated to raise $55 million in the first year.

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.