Thirteen states impose fuel tax changes July 1
The first of July marks the start date of fuel tax rate changes in more than a quarter of all states across the country.
Tax rate changes range from a 6-cent increase on Washington gas to a 3.5-cent decrease on Connecticut diesel.
California
Fuel rate increases in California take effect the first of the month. The automatic increases aim to keep pace with inflation.
For the past year, excise tax collected on gas purchases has been set at 59.6 cents. The diesel rate has been 45.4 cents.
As of July 1, the excise tax on gas will increase 1.6 cents per gallon to 61.2 cents.
The diesel excise tax in the Golden State will increase 1.2 cents per gallon to 46.6 cents.
Additionally, new state regulations are expected to contribute to a total price increase at the pump ranging from 5 to 10 cents per gallon.
The Newsom Administration sent out this memo about their July 1st gas tax increases. Start saving for higher prices at the pump. #FixCalifornia pic.twitter.com/Cd8jFqezwm
— Brian W. Jones (@SenBrianJones) June 23, 2025
Colorado
In Colorado, tax and fee rates on gas and diesel are again on the rise.
Gas taxes and fees will increase 4 cents from 30 cents to 34 cents. Diesel taxes and fees will increase 4 cents from 28.5 cents to 32.5 cents.
The changes stem from a 2021 state law touted by Gov. Jared Polis to “future proof’ the state’s transportation-funding system. The transportation-funding law created a new set of road-user fees to benefit highways, transit and electric vehicle infrastructure.
New fees and existing fees were indexed to inflation or to the national highway construction costs index.
As a result, road usage fees assessed on gas and diesel purchases will increase one penny from 4 cents to 5 cents. A bridge and tunnel impact fee will increase from 4 cents to 7 cents.
State taxes on gas and diesel will remain unchanged at 22 cents and 20.5 cents.
Connecticut
Connecticut’s diesel tax rate is set to drop.
Diesel in the state is taxed following an annual formula that includes a fixed base and an adjustment that takes into account the average wholesale diesel prices from the prior year.
As of July 1, the 52.4-cent diesel tax rate will decrease by 7%. The change amounts to a 3.5-cent drop to 48.9 cents per gallon.
Meanwhile, the state’s 25-cent excise tax on gas purchases has not changed since July 2000. An 8.1% petroleum products tax is also collected on gas. Combined with the excise tax, the total gas tax is 51.4 cents.
Illinois
Fuel tax rates in Illinois are again headed up.
A 6-year-old capital plan approved by state lawmakers included a component tying fuel rates to inflation. As a result, the rates change on an annual basis.
The diesel and gas rates will each increase 1.3 cents to 55.8 cents and 48.3 cents.
Since 2019, the diesel rate is up 34.3 cents from 21.5 cents. The gas rate is up 29.3 cents from 19 cents.
During the current fiscal year, the Illinois State Comptroller’s office reported the state has collected $2.8 billion in fuel taxes. The amount is down $87.3 million from the previous fiscal year.
Indiana
A scheduled increase is also set to take effect in Indiana.
For the past year, the excise rates on gas and diesel have been set at 35 cents and 59 cents. Starting July 1, the rates will each increase.
The gas tax will rise by a penny to 36 cents. The diesel tax will increase by 2 cents to 61 cents.
The changes are tied to state law that requires annual rate adjustments through 2027.
Annual gas tax changes are capped at a penny. Annual diesel tax changes are limited to 2 cents.
Kentucky
Meanwhile, across the state line in Kentucky, a fuel tax drop is on the horizon.
The gas and diesel rates now are 26.4 cents and 23.4 cents.
The taxes include an excise tax, a supplemental highway user tax and a petroleum environmental assurance fee.
Statute links the state fuel taxes to the average wholesale price of fuel. As a result, when the price goes up, the tax rate follows. On the other hand, a decline results in a corresponding price dip.
The state’s rural secondary road program gets 22.2% of fuel tax revenue. Counties receive 18.3% of fuel tax collections. Municipalities get 7.7% of the tax revenue. The rest goes to the state road fund.
At the first of the month, both tax rates are set to decrease by 1.4 cents to 25 cents for gas and 22 cents for diesel.
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Maryland
Fuel tax rates in Maryland also are headed down. The gas tax and the diesel tax will each decrease by 0.9 cents.
The changes set for the first of the month are due to a decade-old inflation indexing law that includes two components. Maryland law authorizes fuel rates to be adjusted each July based on the consumer price index and the retail price for fuel.
As a result, the gas tax will decrease from 46.1 cents to 46 cents. The diesel rate will dip from 46.85 cents to 46.75 cents.
Despite the slight price dip, both tax rates are up nearly 10 cents over four years.
Mississippi
The state of Mississippi is set to collect more fuel tax revenue.
Starting July 1, the state’s 18-cent excise tax on fuel purchases will begin to increase.
The tax rate increase is part of a massive tax overhaul bill signed into law by Gov. Tate Reeves.
The new law will increase the tax on gas and diesel by 9 cents per gallon over multiple years.
A 3-cent rate increase is set for the first of next month. Additional increases will be implemented each July through 2027. At that time, the fuel tax rate will reach 27 cents.
The Mississippi Department of Transportation will receive the bulk of the additional fuel tax revenue – 74%. The State Aid Road Fund will get 23.25% of tax revenue, with the state’s multi-modal fund getting the rest.
Missouri
In Missouri, the first of July marks the fifth and final increase to the state’s fuel tax rate.
A 2021 law set up regular increases to the state’s then 17-cent fuel tax rate. The law authorized the tax to increase by 12.5 cents over four years.
The first 2.5-cent increase took effect in October 2021. Increases of the same amount took effect each of the following three summers.
On July 1, the final increase will bring the rate from 27 cents to 29.5 cents. There is no indexing component to allow for future changes.
Counties receive 10% of the fuel tax revenue. Cities get 15%, and the rest goes to the state.
Missouri motorists are permitted to file refund claims each year for reimbursement of the additional tax amounts.
Statehouse pursuits since 2021 have failed to extend the refund offering to all Missouri vehicle owners, including truck drivers.
Nebraska
Starting July 1, a fuel tax increase will take effect in Nebraska.
The 30.4-cent gas and diesel excise rate will increase by 1.4 cents to 31.8 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 increased fuel prices and a six-month adjustment in the wholesale tax rate.
Another recalculation is set for Jan. 1, 2026.
Rhode Island
The Rhode Island Division of Taxation makes an adjustment to the fuel tax every two years on July 1. The adjustment is based on inflation.
The decade-old law ties the rate adjustment to the consumer price index for all urban consumers determined as of Sept. 30 of the prior calendar year. There is a nine-month time lag before the adjustment is implemented.
As of the first of the month, the existing 37-cent tax rate on gas and diesel purchases will increase by a penny to 38 cents.
Virginia
In Virginia, the gas and diesel excise rates are up the first of the month. The 30.8-cent excise rate on gas will increase by nearly a penny to 31.7 cents.
The 31.8-cent diesel rate will be raised by the same amount to 32.7 cents.
Additionally, the wholesale sales tax on fuels is increasing. The gas rate will increase from 9 cents to 9.3 cents. The diesel rate will rise from 9.1 cents to 9.4 cents.
The state’s combined gas taxes will total 41 cents, and the diesel taxes will be 42.1 cents.
The tax rate changes are due to indexing to annual changes in the consumer price index.
Washington
Washington Gov. Bob Ferguson has signed into law legislation to raise $3.2 billion over six years through a mix of new and adjusted revenue sources.
The new law will help to provide revenue to maintain and improve the state’s roads, bridges, ferries and transit systems.
The most notable change coming to the Evergreen State is a 6-cent increase in the fuel excise tax. The gas and diesel rates will increase on July 1.
The gas tax will increase by 6 cents from 49.4 cents to 55.4 cents. The diesel tax will increase by 3 cents on July 1 and again in July 2027 to reach 55.4 cents.
Local governments will get 5% of the new fuel tax revenue. LL