Illinois doubles fuel tax rates, nixes despised truck fee

June 6, 2019

Keith Goble

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Fuel tax rates in Illinois are on the verge of doubling. In a nod to truckers, the state also is prepared to relieve professional drivers of a burdensome tax collected for nearly two decades.

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.

Dubbed “Rebuild Illinois,” a $45 billion capital plan approved by the General Assembly will raise the state’s fuel tax rates to 38 cents for gas and 45.5 cents for diesel fuel. The legislation, which also includes various vehicle fee increases, now moves to Gov. J.B. Pritzker’s desk for his signature.

“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 additional taxes and fees on vehicles in SB1939 are estimated to raise $2.4 billion annually. The fuel tax rates will also be tied to inflation.

An amendment to the Illinois Constitution approved by voters in 2016 requires that transportation-related revenue only be used for transportation purposes. As a result, vehicle revenue collected from the capital plan will pay for infrastructure improvements that include roads, bridges and transit.

The fuel tax rate increases will be effective July 1.

Vehicle fees

The 177-page bill includes other vehicle fee increases to take effect the first of the year.

Most vehicles will see registration fees raised from $98 to $148. Registrations for 80,000-pound trucks will increase by $100, from $1,415 to $1,515.

Another notable increase will be for electric vehicles. The registration fee will increase from $35 to $248 for two years.

Local fuel tax

A separate component of the capital plan gives Chicago area governments authorization to collect their own fuel tax.

Specifically, the bill permits the city of Chicago to increase its local fuel tax by 3 cents. Lake County and Will County also are authorized to collect a fuel tax of up to 8 cents per gallon. Additionally, DuPage, Kane and McHenry counties can double their fuel tax from 4 cents to 8 cents.

Authorization for additional tax collection at the local level follows a call earlier this year from a group of mayors in the Chicago area for legislators to get a deal done to raise the Illinois fuel tax rate.

Commercial distribution fee

One more provision in the bill will end collection of the commercial distribution fee.

The Illinois Trucking Association, Midwest Truckers Association, and the Owner-Operator Independent Drivers Association have long pushed to get the fee eliminated.

Since 2004, the state has collected a surcharge on annual registration fees for vehicles between 8,001 pounds and 80,000 pounds. During the first year of collection the fee was 36%.

The fee was later reduced to 21.5% before it was trimmed to its current rate of 14.35%. Over the most recent fiscal year, the fee netted the state $56 million.

Since 2006, affected truckers have been required to chip in another $400 to cover the commercial distribution fee. On top of the nearly $2,800 they already pay for base plates, truckers pay about $3,200 a year to tag their trucks in the state.

To the chagrin of professional drivers, the fee they contend amounts to a tax on a tax has supported the state’s general fund.

Effective July 1, 2020, the tax on a tax will be removed.

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.