How High Are Gas Taxes in Your State?

by Colby Pastre, The Tax Foundation, July 23, 2015

This week’s tax map takes a look at state gasoline tax rates, using data from a recent report by the American Petroleum Institute. Pennsylvania has the highest rate of 51.60 cents per gallon (cpg), and is followed closely by New York (45.99 cpg), Hawaii (45.10 cpg), and California (42.35 cpg). On the other end of the spectrum, Alaska has the lowest rate at 12.25 cpg, but New Jersey (14.50 cpg) and South Carolina (16.75 cpg) aren’t far behind. These rates do not include the additional 18.40 cent federal excise tax.

Gas taxes are generally used to fund transportation infrastructure maintenance and new projects. While gas taxes are not a perfect user fee like tolls, they are generally more favorable than other taxes because they better connect the users of roads with the costs of enjoying them. However, many states’ and the Federal government’s gas taxes are not adjusted for inflation and therefore do not respond to price changes. Over time, a nominal gas tax rate will decline in real terms, while the costs associated with funding roads will increase with inflation. This has been a contributing factor to the insolvency of the federal Highway Trust Fund, which runs out of funds at the end of this month.

States vary in how they impose gas taxes. Some impose a cents per gallon excise; others impose motor fuel-specific wholesale or retail sales taxes or “rack taxes” based on average prices over a given period; and many impose environmental cleanup and other miscellaneous taxes atop the traditional gas tax. API’s methodology converts these disparate tax structures into an estimate of gas taxes expressed in cents per gallon to facilitate comparisons across states.