Upcoming fuel tax rate changes

States across the country are ringing in the new year with changes to their fuel tax rate collections.

About a dozen states applied changes over the past year. Changes range from a 4.3-cent increase in Maryland to a nearly 2-cent dip in Utah.

As of Jan. 1, 2024, modest changes of about a penny or less are expected in states that include Florida, Georgia, Michigan, Nebraska, New York, North Carolina, Pennsylvania and West Virginia. The changes are based on automatic adjustments.

The change in Georgia could be delayed. At press time, a fuel tax holiday in place since September remained in effect.

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.

In some states, automatic adjustments are implemented annually, while adjustments occur more frequently in other states.

The Transportation Investment Advocacy Center reports there are 23 states with variable-rate state fuel taxes. Depending on the state, rate changes are calculated every month, quarterly, every six months, every year or every two years.

Indiana updates its fuel rates each month. In Vermont, they’re updated quarterly. Nebraska revises its tax rate every six months. And Alabama and Rhode Island do so every two years.

Additionally, annual updates are made in Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Michigan, New York, North Carolina, Pennsylvania, Utah, Virginia and West Virginia.

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