How much drivers pay at the gas pump — averaging $3.22 per gallon in September — depends largely on the price of oil and the cost of refining it. But federal, state and local taxes and fees can add significantly to the total.
On top of a federal tax of 18.4 cents per gallon, most states levy multiple taxes and fees on a gallon of gas. Those include some combination of excise taxes (imposed on goods, services and activities), sales taxes, environmental taxes and inspection fees.
Those costs add up to an average of 32.6 cents per gallon in state taxes, according to a NerdWallet analysis of U.S. Energy Information Administration data. Combined with the federal tax, that’s about 51 cents per gallon, on average, factored into the gas prices you see at your local station.
States with the highest gas tax
State tax rates vary widely. California’s rate (69.8 cents per gallon) and Illinois’s rate (67.1 cents) are highest, followed by Pennsylvania (58.7 cents). Alaska has, by far, the lowest state tax (9 cents per gallon), followed by Mississippi (18.4 cents) and Hawaii (18.5 cents).
2024 state gas tax hikes
In many cases, gas taxes are adjusted annually based on the consumer price index, a proxy for inflation calculated by the U.S. Bureau of Labor Statistics. That means taxes may rise (or fall) with the annual rate of inflation. Sometimes states also phase in new or higher fees by increasing them incrementally.
As for what happens with that tax revenue, states often use it to fund infrastructure improvements and environmental initiatives.
Oct. 1 gas tax hike
Washington D.C.’s motor fuel surcharge will tick up slightly from 11.4 cents per gallon to 11.8 cents per gallon on Oct. 1, according to the D.C. Office of Tax and Revenue. That fee is added to the district’s 23.5-cent sales tax on gasoline. Altogether, drivers pay 35.3 cents per gallon in state taxes when they fill up.
July 1 gas tax hikes
Gas taxes in seven states went up on July 1, generally by less than 2 cents.
California’s excise tax on gas rose from 57.9 cents per gallon to 59.6 cents per gallon, according to the California Department of Tax and Fee Administration. When other state taxes and fees are taken into account, the state tax on a gallon of fuel in California rose from about 68 cents to about 70 cents.
Colorado’s road usage fee increased from 3 cents per gallon to 4 cents per gallon, according to the Colorado Department of Revenue. Additionally, an environmental fee increased from 0.6 cents per gallon to about 1.3 cents per gallon. Those fees are on top of a 22-cent gas tax. Altogether, the state tax on gas increased from about 26 cents per gallon to about 28 cents per gallon.
The Illinois gas tax increased from 45.4 cents per gallon to 47 cents per gallon, according to the Illinois Department of Revenue. All told, the state tax on gas increased from 66.5 cents per gallon to 67.1 cents per gallon in state taxes — the second highest in the country.
In Indiana, the gas tax increased from 34 cents to 35 cents per gallon, according to the Indiana Department of Revenue. In addition to the excise tax and a 1-cent oil inspection fee, the state charges a gasoline use tax. That tax rate is adjusted on a monthly basis. In July, the use tax rate is 20.1 cents per gallon. In all, Indiana drivers pay state taxes totaling 56.1 cents per gallon.
Missouri’s motor fuel tax rate increased from 24.5 cents per gallon to 27 cents per gallon, according to the Missouri Department of Revenue. Combined with two other fees levied on a gallon of gas, totaling about half a cent, the state taxes add up to 27.5 cents per gallon.
Nebraska’s fuel tax rate went up half a cent to 29.6 cents per gallon, according to the Nebraska Department of Revenue. Combined with an environmental fee, drivers in the state pay 30.5 cents per gallon in state taxes.
The Virginia motor fuels tax rate increased from 29.8 cents per gallon of gas to 30.8 cents per gallon, according to the Virginia Department of Motor Vehicles. The state’s motor vehicle fuels sales tax rate for gas increased from 8.7 cents per gallon to 9 cents. In all, motorists pay 40.4 cents per gallon in state taxes.
