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Fuel Sales Taxes and Other Related Taxes

Motor Fuel Sales Taxes and Other Taxes on Fuel Distributors or Suppliers

Updated June 2012

By Simon Workman and Jaime Rall

dollar into a gas tankOverview

The charts below provide information about the 16 states and Puerto Rico known to have state-level sales taxes on motor fuels or other taxes on fuel distributors or suppliers. As shown, seven of those states (Calif., Fla., Ga., N.Y., Tenn., Vt. and W.V.) have a special statewide sales tax on gasoline or diesel; seven states (Calif., Fla., Ga., Hawaii, Ill., Ind. and Mich.) and Puerto Rico make motor fuels subject to some or all of the statewide general sales tax; and seven states (Conn., Hawaii, Neb., N.J., N.M., N.Y. and Pa.) and Puerto Rico collect some other tax from fuel distributors or suppliers [1]. Nearly all of these states dedicate some or all of those revenues to transportation—except for Hawaii, where only one county-level surcharge is used for transportation purposes.

These charts do not include each state’s motor fuel excise tax or any regional motor fuel sales taxes, which are imposed in at least three states (Hawaii, Ill. and Va.). They also exclude those states that dedicate to transportation purposes a portion of the general sales tax that is collected on other items besides motor fuel. For example, in Virginia, 0.5 percent of the statewide sales tax is dedicated to the Transportation Trust Fund; motor fuels used in highway vehicles, however, are generally exempt from that tax.

The information in these charts is drawn largely from Transportation Governance and Finance: A 50-State Review of State Legislatures and Departments of Transportation, an authoritative analysis that was jointly released by NCSL and the American Association of State Highway and Transportation Officials (AASHTO) Center for Excellence in Project Finance in June 2011.  The full report—available as a free online PDF—offers an overview of key transportation funding, finance and governance issues at the state level, plus detailed, survey-based data for all 50 states, the District of Columbia and Puerto Rico.  The charts below also include data from original statutory research and the additional sources listed.

 

Chart 1: Statewide Motor Fuel Sales Taxes

California | Florida | Georgia | Hawaii | Illinois | Indiana | Michigan | New York | Tennessee | Vermont | West Virginia | Puerto Rico

 

State

Relevant Statutes

Motor Fuel Sales Tax

Dedicated to transportation purposes?

Provisions

Additional Sources

California

  • Cal. Revenue & Taxation Code §6051.8
  • Cal. Revenue & Taxation Code §6357.7
  • Cal. Revenue & Taxation Code §7360
  • Cal. Government Code §29530
  • Cal. Const. Art. 19B, §2
  • On diesel only: 1.87 percent sales tax in addition to a 5 percent state sales tax.
  • Gasoline subject to a reduced portion (2.25 percent) of the general sales tax. Previously subject to a separate sales tax, but removed by the Fuel Tax Swap provisions (effective July 1, 2010) which imposed a $0.173 per gallon excise tax in its place. This tax must be annually indexed so that the total revenues from the new excise tax equal the revenues lost from the discontinued sales tax.

Yes

  • Funds from the 1.87 percent diesel sales tax are allocated to the Public Transportation Account in the State Transportation Fund.
  • Funds from both the base gasoline excise tax and the indexed excise tax that came into effect in 2011 as part of the Fuel Tax Swap are constitutionally dedicated to transportation.
  • 0.25 percent of the total state sales tax is dedicated to transit through the Local Transportation Fund.

California Board of Equalization, Fuel Tax Swap FAQs, 2012

 

California Legislative Analyst’s Office, Achieving General Fund Relief from Transportation Funds, 2011

Florida

  • Fla. Stat. Ann. §206.41
  • Fla. Stat. Ann. §206.606
  • Fla. Stat. Ann. §212
  •  A “fuel sales tax” is imposed on each gallon of fuel sold in the state.  The cents-per-gallon rate is indexed to the CPI, but statute ensures the tax rate shall not be lower than 6.9 cents per gallon.
  • Motor fuel is also subject to the 6 percent statewide sales tax.

Partial

  • Most revenue from the “fuel sales tax” is distributed to the State Transportation Trust Fund. However, set-asides are included for the Fish and Wildlife Conservation Commission, the State Game Trust Fund and the Agricultural Emergency Eradication Trust Fund.
  • Revenue from the statewide sales tax is primarily allocated to the general fund, although there are some non-transportation related distributions.

Office of Economic and Demographic Research, Florida Tax Handbook, 2011

Georgia

  • Ga. Code Ann. §48-8-3
  • Ga. Code Ann. §48-9-3
  • Ga. Code Ann. §48-9-14
  • Ga. Const. Art. 3, §9 ¶VI
  • A 4 percent “prepaid state tax” is levied on motor fuel [2]. This tax is imposed at a cents-per-gallon rate that is set using a weighted average indexed retail sales price for each type of fuel, and is collected by the distributor at the time the fuel is delivered to anyone that does not have a valid distributor license. 
  • Of this 4 percent tax, 3 percent represents the fuel tax and 1 percent represents a general sales tax.
  • Sales to the state of Georgia or to a county or municipality of the state are subject to a 3 percent tax rate, being exempt from the 1 percent sales tax portion of the tax.  

Partial

  • From the 4 percent “prepaid state tax,” 75 percent of the revenue is constitutionally dedicated to transportation, as a motor fuel tax.
  • The remaining 25 percent represents a general sales tax and is deposited in the state general fund.

Georgia State University, Gasoline Taxes in Georgia, 2006

 

Georgia Department of Revenue, Georgia Sales and Use Tax Informational Bulletin for Prepaid State Tax on Motor Fuel, 2004

Hawaii

  • Hawaii Rev. Stat. §237
  • Hawaii Rev. Stat. §243-3.5
  • Hawaii Rev. Stat. §248-8
  • Hawaii Rev. Stat. §46-16.8
  • A state “environmental response, energy, and food security tax” of $1.05 is imposed on each barrel of petroleum product sold by a distributor (see also Chart 2).
  • Motor fuel is also subject to a 4 percent “General Excise Tax,” which applies to all goods and services. (Hawaii imposes this tax on sellers, rather than imposing a statewide general sales tax on purchasers.) State statute allows counties to impose a surcharge to the state General Excise Tax. The county of Honolulu has imposed a 0.5 percent surcharge.

No (except for one county-level surcharge)

  • The “environmental response, energy and food security tax” is divided between the environmental response revolving fund (5 cents), the energy security special fund (15 cents), the energy systems development special fund (10 cents) and the agricultural development and food security special fund (15 cents). Remaining revenue is deposited in the state general fund.
  • State statute appears to direct General Excise Tax revenues to the general fund. Revenues from the 0.5 percent Honolulu county surcharge are dedicated to rail mass transit.

Personal communication with staff, Hawaii House Finance Committee.

 

Illinois

  • Ill. Ann. Stat. ch. 30, §740/2-3
  • Ill. Ann. Stat. ch. 35, §105/3-10
  • Ill. Ann. Stat. ch. 35, §105/9
  • Ill. Ann. Stat. ch. 70, §3615/4.03
  • Ill. Ann. Stat. ch. 70, §3615/4.03.3
  • Ill. Ann. Stat. ch. 70, §3615/4.09

 

  • No specific statewide motor fuel sales tax, but gasoline and diesel are subject to the statewide general sales tax of 6.25 percent.
  • Also, state statute allows the Regional Transportation Authority to impose a regional “public transportation tax” on motor fuel in northeastern Illinois, not to exceed 5 percent.

 

Partial

  • Twenty percent of the total revenue from the general sales tax is allocated to local/regional projects, which can include regional transportation and infrastructure, through the “State and Local Sales Tax Reform Fund.”
  • From the remaining 80 percent of the sales tax revenue, some funds are allocated to regional public transportation, through the Downstate Public Transportation Fund and the Metro-East Public Transportation Fund.
  • The regional public transportation tax imposed in northeastern Illinois is dedicated solely to transportation. Some revenue is directly allocated to counties and the city of Chicago, with the remainder allocated to the Regional Transportation Authority. 

Chicago Transit Board, President's Budget Recommendations, 2011

Indiana

  • Ind. Code Ann. §6-2.5-7-3
  • Ind. Code Ann. §6-2.5-10-1
  • No specific motor fuel sales tax, but gasoline and diesel are subject to the statewide sales tax of 7 percent.

Partial

  • Since July 2011, from the total revenues of the sales tax, 0.029 percent is allocated to the Industrial Rail Service Fund and 0.123 percent to the Commuter Rail Service Fund.
  • From 2008 to 2011, an additional 0.67 percent was also allocated to the Public Mass Transportation Fund.

Indiana Legislative Services Agency, Indiana Handbook of Taxes, Revenues, and Appropriations, 2011

Michigan

  • Mich. Comp. Laws Ann. §205.75

 

  • No specific motor fuel sales tax, but gasoline and diesel are subject to the statewide sales tax of 6 percent.

Partial

  • The general sales tax rate was raised from 4 percent to 6 percent in 1994; all revenues from the additional 2 percent increase go to the state school aid fund. Of the revenues from the base 4-percent tax on all items, 15 percent is distributed to cities, villages and townships, and 60 percent to the state school aid fund. After those set-asides, of the remaining sales tax collected on motor fuels and other vehicle-related items only, a variable amount (not less than 27.9 percent) is allocated to the Comprehensive Transportation Fund. The balance goes to the general fund.

Federal Highway Administration, Table S-106—Highway Taxes and Fees, 2008

 

State of Michigan Attorney General, Gas Prices, 2012

New York

  • N.Y. Tax Law §301-j
  • N.Y. Tax Law §312
  • N.Y. Tax Law §523
  • N.Y. Tax Law §515

 

  • The state “fuel use tax” includes a variable sales tax component.
  • Also, a “petroleum business tax” is paid by distributors (see also Chart 2).

Yes

  • Revenue from the “fuel use tax” is dedicated to the highway and bridge trust fund.
  • Revenue from the “petroleum business tax” is dedicated to the highway and bridge trust fund and the mass transportation trust fund (see also Chart 2).

 

Tennessee

  • Tenn. Code Ann. §67-3-203
  • Tenn. Code Ann. §67-3-906
  • Tenn. Code Ann. §67-6-329
  • A “special privilege tax” is imposed on all petroleum products at a rate of $0.01 per gallon.
  • Gasoline is exempt from the statewide sales tax.

Partial

  • Funds from all combined fuel taxes, including the “special privilege tax,” are split between cities and counties, the state general fund and the Tennessee Department of Transportation.

Tennessee DOT, Tracking Tennessee's 21.4-cent Gasoline Tax Fiscal Year 2011-2012
 

Tennessee Department of Revenue, Motor Fuel Taxes, 2012

Vermont

  • Vt. Stat. Ann. tit. 19, §11f
  • Vt. Stat. Ann. tit. 23, §3003
  • Vt. Stat. Ann. tit. 23, §3106
  • Vt. Stat. Ann. tit. 32, §9741
  • Imposes a “Motor Fuel Transportation Infrastructure Assessment” fee of 2 percent on the retail price of gasoline and 3 cents-per-gallon on diesel.
  • Motor fuel subject to the gasoline tax is exempted from the general sales tax.

Yes

  • The “Motor Fuel Transportation Infrastructure Assessment” fee is dedicated to the Vermont Transportation Infrastructure Bond (TIB) Fund. This segregated revenue source is dedicated, as a first priority, to the repayment of TIB bonds issued to finance highway or bridge construction. Any fund revenue left over is allocated to the construction costs of long-lived transportation assets (highways, bridges, DOT garages, etc).

Correspondence with Neil Schickner, Vermont Legislative Joint Fiscal Office.

West Virginia

  • W. Va. Code §11-14C-5
  • W. Va. Code §17-3-1
  • W. Va. Const. Art. VI, §52
  • Imposes a 5 percent tax on the average wholesale price of a gallon of fuel, provided that the average wholesale price cannot be below $2.34 per invoiced gallon.

Yes

  • Funds are allocated to the state road fund, use of which is statutorily restricted to state roads and WVDOT administration.

West Virginia Legislative Auditor's Office, Digest of Revenue Sources, 2011

Puerto Rico

  • 3 L.P.R.A. §283b
  • 13 L.P.R.A. §9011
  • 13 L.P.R.A. §9084
  • Imposes an excise tax on crude oil and partially finished and finished products derived from oil and other hydrocarbon mixtures (see also Chart 2). The tax is between $3 and $6 per barrel or fraction of a barrel, based on the index price per barrel, which is calculated monthly.
  • Motor fuel subject to general excise tax of 5 percent.

Partial

  • 13 L.P.R.A. §9084 states that the total tax collected on gasoline, 4 cents of the gas oil or diesel oil tax, and up to $120 million dollars per fiscal year of the excise tax on crude oil, partially finished and finished products derived from oil and other hydrocarbon mixtures is dedicated to the Highways and Transportation Authority.

 

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Chart 2: Other Taxes on Fuel Distributors or Suppliers

Connecticut | Georgia | Hawaii | Nebraska | New Jersey | New Mexico | New YorkPennsylvania | Puerto Rico

 

State

Relevant Statutes

Tax on Fuel Distributors or Suppliers

Dedicated to transportation purposes?

Provisions

Additional Sources 

  Connecticut

  • Conn. Gen. Stat. Ann. §12-587
  • Conn. Gen. Stat. Ann. §13b-61a
  • “Petroleum Products Gross Earnings Tax” imposed on oil companies. Currently 7 percent of quarterly earnings.
  • As of 2012, the amount of gross earnings subject to the tax is capped at $3 per gallon. All earnings in excess of $3 are exempt from the tax.

 Partial

  • An increasing portion of revenue from the “Petroleum Products Gross Earnings Tax” is deposited in the Special Transportation Fund each year. The amount to be deposited in 2012 is $226.9 million.

 

  Georgia

  • Ga. Code Ann. §§48-8-3
  • Ga. Code Ann. §48-9-3
  • Ga. Code Ann. §48-9-14
  • Ga. Const. Art. 3, §9 ¶VI
  • A 4 percent “prepaid state tax” is levied on motor fuel [3]. This tax is imposed at a cents-per-gallon rate that is set using a weighted average indexed retail sales price for each type of fuel, and is collected by the distributor at the time the fuel is delivered to anyone that does not have a valid distributor license. 
  • Of this 4 percent tax, 3 percent represents the fuel tax and 1 percent represents a general sales tax.
  • Sales to the state of Georgia or to a county or municipality of the state are subject to a 3 percent tax rate, being exempt from the 1 percent sales tax portion of the tax.  

 Partial

  • From the 4 percent “prepaid state tax,” 75 percent of the revenue is constitutionally dedicated to transportation, as a motor fuel tax.
  • The remaining 25 percent represents a general sales tax and is deposited in the state general fund.

     

Georgia State University, Gasoline Taxes in Georgia, 2006

 

Georgia Department of Revenue, Georgia Sales and Use Tax Informational Bulletin for Prepaid State Tax on Motor Fuel, 2004

  Hawaii

  • Hawaii Rev. Stat. §237
  • Hawaii Rev. Stat. §243-3.5
  • Hawaii Rev. Stat. §248-8
  • Hawaii Rev. Stat. §46-16.8
  • A state “environmental response, energy, and food security tax” of $1.05 is imposed on each barrel of petroleum product sold by a distributor.
  • Motor fuel is also subject to the “General Excise Tax” of 4 percent, which applies to all goods and services (see also Chart 1). (Hawaii imposes this tax on sellers, rather than imposing a statewide general sales tax on purchasers.) State statute allows counties to impose a surcharge to the state General Excise Tax . The county of Honolulu has imposed a 0.5 percent surcharge.

No (except for one county-level surcharge)

  • The “environmental response, energy and food security tax” is divided between the environmental response revolving fund (5 cents), the energy security special fund (15 cents), the energy systems development special fund (10 cents) and the agricultural development and food security special fund (15 cents). Remaining revenue is deposited in the state general fund.
  • State statute appears to direct General Excise Tax revenues to the general fund. Revenues from the 0.5 percent Honolulu county surcharge are dedicated to rail mass transit.

Personal  communication with staff, Hawaii House Finance Committee.

 

  Nebraska
  • Neb. Rev. Stat. §66-489.02
  • Neb. Rev. Stat. §66-6,109.02
  • A tax of 5 percent on the average wholesale price of fuel is imposed on producers, suppliers, distributors, wholesalers, importers and retailers of motor fuels.
Yes
  • All revenues are directed to the Highway Trust Fund. After credits and refunds, the balance is allocated as follows: 66 percent to the Highway Cash Fund for the Department of Roads; 17 percent to counties via the Highway Allocation Fund for road purposes; and 17 percent to municipalities via the Highway Allocation Fund for street purposes.
 

  New Jersey

  • N.J. Stat. Ann. §54:15B-3
  • N.J. Const. art. VIII, §2, ¶4
  • A “petroleum products gross receipts tax” of 2.75 percent is imposed on all companies engaged in refining and/or distributing petroleum products for distribution in the state.

 Yes

  • The state constitution dedicates the “petroleum products gross receipts tax” to transportation system capital improvements and prohibits the Legislature from borrowing, appropriating or using any part of these funds for any other purpose.

New Jersey Division of Taxation, Petroleum Products Gross Receipts Tax Overview, 2010

  New Mexico

  • N.M. Stat. Ann. §7-1-6.25
  • N.M. Stat. Ann. §7-9-13.2
  • N.M. Stat. Ann. §7-13A-1
  • A “Petroleum Products Loading Fee” is imposed on distributors of gasoline and diesel.
  • Motor fuel is exempt from the statewide sales tax.

 Partial

  • Revenue from the “Petroleum Products Loading Fee” is distributed to the local government road fund and the corrective action fund.

 

  New York

  • N.Y. Tax Law §301-j
  • N.Y. Tax Law §312
  • N.Y. Tax Law §523
  • N.Y. Tax Law §515

 

  • The state “fuel use tax” includes a variable sales tax component (see also Chart 1).
  • Also, a “petroleum business tax” is paid by distributors.

     

 Yes

  • Revenue from the “fuel use tax” is dedicated to the highway and bridge trust fund (see also Chart 1).
  • Revenue from the “petroleum business tax” is dedicated to the highway and bridge trust fund and the mass transportation trust fund.

 

  Pennsylvania

  • Pa. Cons. Stat. Ann. tit. 75, §9004
  • Pa. Cons. Stat. Ann. tit. 75, §9502
  • An “oil company franchise tax” is imposed on fuels on a cents-per-gallon equivalent basis, remitted by distributors. This is a variable rate tax adjusted annually within a wholesale price floor of 90 cents and ceiling of $1.25.

 Yes

  • Revenue is dedicated to highway maintenance and construction.

     

Pennsylvania Department of Revenue, Oil Company Franchise Tax, 2012

  Puerto Rico

  • 3 L.P.R.A. §283b
  • 13 L.P.R.A. §9011
  • 13 L.P.R.A. §9084
  • Imposes an excise tax on crude oil and partially finished and finished products derived from oil and other hydrocarbon mixtures (see also Chart 1). The tax is between $3 and $6 per barrel or fraction of a barrel, based on the index price per barrel, calculated monthly.
  • Motor fuel subject to general excise tax of 5 percent.

 Partial

  • 13 L.P.R.A. §9084 states that the total tax collected on gasoline, 4 cents of the gas oil or diesel oil tax, and up to $120 million dollars per fiscal year of the excise tax on crude oil, partially finished and finished products derived from oil and other hydrocarbon mixtures is dedicated to the Highways and Transportation Authority.

 

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Notes

1. Georgia’s “prepaid sales tax” is classified here, as in state statute, as a special statewide sales tax on fuel and as an imposition on fuel of a reduced general statewide sales tax; note, however, that this tax is also listed under Chart 2 because the tax is collected by the distributor. See Chart 1 and Chart 2 for more details.

2. Georgia’s “prepaid state tax” is primarily listed in this chart because it comprises both a statewide sales tax on fuel and a general sales tax. It is also included in Chart 2, however, because it is collected by the distributor. [Back to Chart 1]

3. Georgia’s “prepaid state tax” tax is primarily listed in Chart 1 because it comprises both a statewide sales tax on fuel and a general sales tax. It is also included here, however, because it is collected by the distributor. [Back to Chart 2]

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