Fuel tax rate changes begin in eight states on July 1

July 1, 2020

Keith Goble

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The first of July marks changes in fuel tax collections in eight states from California to Connecticut. The fuel tax rate changes range from a 5-cent increase on gas in Virginia to fractional price changes for gas and diesel in Illinois and Maryland.

California

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

Excise tax collected on gas purchases has been set at 47.3 cents and the diesel rate at 36 cents. As of Wednesday, the gas rate is up 3.2 cents per gallon to 50.5 cents.

The diesel tax in the Golden State is up 2.5 cents per gallon to 38.5 cents.

According to state estimates, the latest tax rate increases will raise $440 million over the next fiscal year.

The latest increase to fuel taxes 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 also were included in the funding deal.

The 10-year, $52 billion transportation funding deal – SB1 – 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.

Connecticut

The state’s diesel fuel tax rate is headed down. The 46.5-cent excise rate will decrease by 1.9 cents to 44.6 cents per gallon for the next year.

The gas tax will remain unchanged at 25 cents.

Illinois

Fuel tax rates in Illinois are up for the second year in a row. The boost, however, is much less severe from one year ago.

As a result of a $45 billion capital plan approved a year ago by the General Assembly, the state gas and diesel fuel taxes were doubled. Since then, the gas rate has been set at 38 cents and the diesel rate at 45.5 cents.

The capital plan included a component tying the fuel rates to inflation. Starting today, the gas and diesel taxes are up 0.7 cents to 38.7 cents and 46.2 cents.

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.

As a result, this year’s increase for gas is up one penny, to 31 cents. The diesel rate is up 2 cents, to 51 cents.

Maryland

Fuel tax rates in Maryland are dipping. Specifically, the gas tax will be reduced by 0.7 cents and the diesel rate will be trimmed by 0.4 cents.

The changes are due to a six-year-old inflation indexing law. The gas tax will be set at 36.3 cents while the diesel rate will become 37 cents.

Nebraska

Starting July 1, a fuel tax increase is imposed in Nebraska.

The 29.3-cent gas and diesel rate will increase by 3.9 cents to 33.2 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 declining fuel prices and a six-month adjustment in the wholesale tax rate.

Another recalculation is set for Jan. 1.

South Carolina

The 22-cent diesel and gas excise rate collected in South Carolina is going up once again by 2 cents. The change to 24 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 $300 million the first three 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.

Virginia

Virginia’s gas rate is up the first of the month. The 16.2-tax rate is up one nickel to 21.2 cents.

The 20.2-cent diesel rate, however, is unchanged.

The rate change for gas is the first of a two-part tax increase. In July 2021, the gas tax will be raised an additional 5 cents to 26.2 cents per gallon.

At that time, the diesel fuel tax rate will be increased 6.8 cents to 27 cents per gallon.

Starting July 1, 2022, both tax rates will be indexed to annual changes in the consumer price index.

More state news from Land Line is available.

 

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.