The New Year brought adjusted motor fuel taxes to nine states, with seven states increasing their motor fuel taxes and two states decreasing the tax.
Of the states that increased their motor fuel taxes, three of them—Florida, Georgia and North Carolina—did so based on automatic adjustments based off of the variable-rate calculation of their state motor fuel taxes. All three states index their gas tax either wholly or in part to changes in the Consumer Price Index. Both North Carolina and Georgia increased their state gas tax by 0.3 cent-per-gallon, and Florida raised its gas tax by 0.1 cent-per-gallon.
Two states—Michigan and Pennsylvania—raised their gas tax due to legislation from previous years. Legislation approved in 2015 will raise Michigan’s gas tax by 7.3 cents-per-gallon, as well as increase registration fees and impose a new annual hybrid and electric vehicle fee. Pennsylvania’s 8 cents-per-gallon increase is the last increase of a gradually phased-in transition (approved in 2013) from a flat excise tax to a variable-rate tax that adjusts based off of the average wholesale price of gasoline.
Nebraska also raised its state gas tax a total of 1.5 cents-per-gallon due to a combination of 2015 legislation that raised its flat excise tax on gasoline gradually by 6 cents-per-gallon over four years, an additional variable-rate component of the state motor fuel tax that adjusts based on changes to the average wholesale price of motor fuel, and a third component that is adjusted as needed by the state legislature to ensure adequate funding for transportation projects.
Indiana’s sales tax on gasoline is collected at 7 percent of the average price of gasoline. With the recent increase in gasoline prices, the sales tax has increased this month by an amount equivalent to 0.2 cents per gallon.
Additionally, two states—New York and West Virginia—decreased their state motor fuel tax rates, which are both determined based off of the average wholesale price of fuel. West Virginia’s 1 cent-per-gallon decrease (which will result in a $12.5 million loss to the state’s road budget) and New York’s 0.8 cent-per-gallon gas tax decrease are both the result of low fuel prices.
Two states—Vermont and Virginia—did not adjust their motor fuel taxes at the scheduled time due to low fuel prices. Both states have a floor in place that requires the variable-rate tax only be adjusted if the price of fuel is above the floor, or minimum price, in place.
Read TIAC’s comprehensive report on state variable-rate gas taxes.