Road Taxes and Funding by State, 2025

by Jacob Macumber-Rosin, Adam Hoffer, Tax Foundation, March 18, 2025

Federal, state, and local governments raise revenues for road infrastructure and maintenance through a combination of taxes on motor fuel, fees on vehicles like registration or licensure, and direct levies on drivers like tolls. This system constitutes a relatively well-designed user fee system, where roadway expenditures are largely furnished by the people who use the roads generally in proportion to the extent of their use.

However, these road taxes and fees are far from a perfect user fee, especially as inflation, electric vehicles, and fuel efficiency gains erode gas tax revenues per mile of road driven. Most states fail to collect enough in user fees to fully provide for roadway spending. This necessitates transfers from general funds or other revenue sources that are unrelated to road use to pay for road construction and maintenance.

The amount of revenue states raise through roadway-related revenues varies significantly across the US. Only three states—Delaware, Montana, and New Jersey—raise enough revenue to fully cover their highway spending. The remaining 47 states and the District of Columbia must make up the difference with tax revenues from other sources. The states that raise the lowest proportion of their highway funds from transportation-related sources are Alaska (19.4 percent) and North Dakota (35.1 percent), both states which rely heavily on revenue from severance taxes….

Hawaii has increased its proportion of roadway spending furnished by road users from 78 percent to 97.2 percent--7th highest in the USA.

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