Alabama, Missouri, New Jersey fuel tax changes Oct. 1
Fuel tax changes are a seemingly constant occurrence in states throughout the country. The latest changes are in Alabama, Missouri and New Jersey.
Alabama
Starting Oct. 1 in Alabama, the third fuel tax increase in about two years takes effect.
In 2019, Gov. Kay Ivey signed a bill into law to increase fuel rates for the first time in nearly 30 years.
The 2-year-old law authorizes tax rates to be increased by 10 cents over three years. In fall 2019, tax rates were raised by 6 cents from 18 cents and 19 cents, respectively.
The first of two 2-cent increases went into effect in October 2020. Since then, Alabama has collected 26 cents per gallon on gas and 27 cents on diesel.
The final round of three increases takes effect the first of the month. Tax rates will be 28 cents for gas and 29 cents for diesel.
Once fully implemented, tax collection from the 2019 law is estimated to raise $323 million annually.
Two-thirds of the revenue is to be used by the Alabama Department of Transportation. Counties collect 25% of additional funds, and cities receive 8%. The money is used to fund infrastructure improvement, preservation and maintenance projects.
Effective Oct. 1, 2023, the rates also will be indexed. The change to indexing allows for fuel taxes to rise automatically with the rate of inflation.
The increase or decrease of the tax rates will be capped at one penny.
Missouri
The first of the month in Missouri marks the state’s first fuel rate increase in one quarter century.
A new state law clears the way for the 17-cent tax on gas and diesel to increase by 12.5 cents over five years. Starting Oct. 1, the tax will increase 2.5 cents each fiscal year until July 1, 2025. At that time, the tax rate will be increased by 73% to 29.5 cents.
The additional fuel tax revenue from SB262 is estimated to raise $455 million annually.
Included in the new law is an option for most Missouri residents to apply for an exemption and refund. The option will be available to residents fueling vehicles with a gross vehicle weight not exceeding 26,000 pounds.
New Jersey
Truckers and motorists fueling in New Jersey are getting a break in fuel tax expenses. A nearly equal decrease is set to be implemented one year after the state increased taxes on fuel purchases by almost a dime.
Each October, the state revises gas and diesel rates to adjust for any shortage or surplus during the prior fiscal year. As a result, starting Oct. 1, an 8.3-cent decrease in fuel rates takes effect.
The New Jersey Department of Treasury says the reduction results from tax revenue over the past year matching with projections.
The change is in sharp contrast to last year’s 9.3-cent hike attributed to tax revenue falling below projections. At the time, officials blamed the COVID-19 pandemic for the revenue shortfall.
The state’s fuel rate includes two components. Since October 2020, the petroleum products gross receipt tax has been set at 40.2 cents for gas and 44.2 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 50.7 cents and 57.7 cents, respectively.
Effective Oct. 1, the gas rate will decrease to 42.4 cents, and the diesel rate will drop to 49.4 cents.
The most recent round of tax changes occurred on July 1 in eight states. The changes range from a 6.8-cent increase on diesel in Virginia to a 4.8-cent dip on diesel in Connecticut. Smaller price changes for gas and diesel took effect in California, Illinois, Indiana, Maryland, Nebraska and South Carolina.
The next round of fuel tax changes comes on the first of the year. States that annually revise rates on Jan. 1 include Florida, Georgia, New York, North Carolina, Pennsylvania, Utah and West Virginia. LL