Fuel tax rate changes kick in Jan. 1

States from coast to coast are ringing in 2024 with revisions to their fuel tax rate collections.

Fuel tax revisions are fairly constant. About a dozen states applied changes over the past year. Changes included a 4.3-cent gas and diesel tax increase in Maryland and two 3.1-cent diesel and gas tax increases in Illinois totaling 6.2 cents.

The lone decrease in fuel tax rates was in Utah. The tax on gas and diesel was reduced by nearly 2 cents.

Jan. 1 changes

Modest changes of about a penny or less will occur Jan. 1 in states that include Florida, Georgia, Nebraska, New York, and North Carolina. The changes are based on automatic adjustments.

Elsewhere, rate changes range from a 1.4-cent increase in Michigan to about a nickel dip in Pennsylvania.

Michigan

Since 2022, Michigan fuel taxes are linked to the consumer price index. The distinction allows tax collections to increase with inflation.

For the second year in a row, the rates are increasing by 1.4 cents per gallon. The latest boost raises the diesel and gas rates from 28.6 cents to 30 cents.

Oregon

Tax rates in Oregon are on the way up. Both the gas tax and the diesel tax collected have been set at 38 cents per gallon since the first of the year. The rates will each increase by two cents to 40 cents on Jan. 1.

The vehicle miles tax rate for 2024 is also available. The per-mile tax is collected on vehicles with declared weights exceeding 26,000 pounds.

Pennsylvania

Meanwhile, fuel excise taxes in Pennsylvania are headed down.

Starting the first of the month, Pennsylvania’s 61.1-cent gas tax rate will dip by 3.5 cents to 57.5 cents per gallon. The 78.5-cent diesel rate will fall by 4.4 cents to 74.1 cents.

The decreases are attributed to a 2013 state law that lifted the cap on the oil company franchise tax. The law includes a provision that the average wholesale price cannot be below $2.99 per gallon.

If the price remains above the amount for 12 months, the fuel tax rate increases. If the price dips below, the rate decreases. The rates for 2024 will be the same as from 2018-2022.

West Virginia

In West Virginia, the fuel tax includes a flat rate and a variable rate that comprise the combined rate.

For 2023, the gas and diesel tax were 37.2 cents. The fuel tax for both fuels will drop 1.5 cents to 35.7 cents for the coming year.

The flat rate will remain at 20.5 cents while the variable rate will be 15.2 cents.

Automatic adjustments

Automatic adjustments are set up in multiple ways. One method is to calculate the tax by percentage of fuel price at the wholesale level. A related method is to use a combination of percentage of fuel price and a flat excise tax. Another method is to link fuel prices to inflation, such as the consumer price index.

Some states with automatic adjustments are implemented annually while others change more frequently.

In all, the National Conference of State Legislatures reports there are 23 states with variable-rate state fuel taxes.

Changes in Alabama, California, Florida, Hawaii, Illinois, Indiana, Michigan, Minnesota, Rhode Island and Virginia are based on inflation. Rate revisions in Arkansas, Connecticut, Kentucky New York, Pennsylvania, Vermont and West Virginia are tied to the average wholesale price. A combination of factors is linked to rate changes in Georgia, Maryland, Nebraska, New Jersey, North Carolina and Utah. LL