Report Recent Legislative Actions Likely to Change Gas Taxes

Colorado (SB 260)

Summary: The bill implements “road usage fees” on gasoline and diesel fuel purchases, phased in from fiscal year 2022-23 through fiscal year 2031-32. In 2022-23, the fee is 2 cents per gallon, and it will increase by 1 cent each fiscal year until reaching 8 cents in 2028-29. The fee will remain at 8 cents through 2031-32. Beginning in fiscal year 2032-33 the fee is indexed to Highway Construction Cost Index inflation. The road usage fee revenue is credited to the Highway Users Tax Fund for allocation. Distributors of special fuel will also pay a bridge and tunnel impact fee starting at 2 cents per gallon, increasing by 1 cent each year until reaching 8 cents per gallon on the same timeline as the road usage fee. The bridge and tunnel impact fee revenue is credited to the bridge and tunnel enterprise special fund for allocation.

Missouri (SB 262)

Increased the gas tax of 17 cents per gallon by 2.5 cents per gallon each year for five years beginning in October 2021 until reaching 29.5 cents per gallon on July 1, 2025. Motor vehicles which drive on highways, and which are below a certain weight threshold are exempt from the additional tax and are eligible for a refund. Taxpayers must apply annually for the exemption and refund through the Department of Revenue.

Virginia (SB 890)

Modifies fuel tax formulas (previously calculated on a percentage basis) to a fixed cents-per-gallon (CPG) rate that annually adjusts to changes in the Consumer Price Index (CPI). Increases gas and diesel fuel taxes over two years and indexes to annual changes in the CPI thereafter.

The gas tax increased from 16.2 CPG to 21.2 CPG on July 1, 2020, totaling 5 CPG in the first year. The gas tax will again increase from 21.2 CPG to 26.2 CPG and the diesel fuel tax will increase from 20.2 CPG to 27 CPG on July 1, 2021. The combined fuel tax increase totals 11.8 CPG in the second year and 16.8 CPG over two years. Both rates are indexed to annual changes in the CPI, effective July 1, 2022.

The additional tax imposed on the average wholesale price of a gallon of fuel is expanded throughout the commonwealth (paid by fuel distributors and previously only applied to retailers along Northern Virginia’s I-81). The fuel tax formula was also modified (also previously calculated on a percentage basis) to a fixed CPG rate that annually adjusts to changes in the CPI. Moreover, the rate was modified from 2.1% of the average “wholesale price” of a gallon of fuel to a fixed CPG rate of 7.6 CPG for gas and 7.7 CPG for diesel. Additionally, the 2.03% diesel fuel tax that would have become effective on July 1, 2021, was repealed.

District of Columbia (23-760)

The previous rate was 23.5 CPG and will increase to 28.8 CPG and again to 33.8 CPG by Oct. 1, 2021. This increase totals 10.3 CPG. Additionally, the rate will be adjusted annually based on the greater of the annual change in the CPI or zero thereafter. This will make D.C.’s motor fuel tax rate equal to the combined state and regional tax rate in Northern Virginia, which is currently 28.8 CPG for gas and will increase to 33.8 CPG by July 1, 2021. According to D.C.’s Office of the Chief Financial Officer, the gas tax is imposed on every importer of motor fuels, including gasoline, diesel fuel and combustible gases and liquids suitable for the generation of power for motor vehicles. All revenue from this tax is dedicated to the Highway Trust Fund.

Alabama HB 2

Increased the state’s gas tax by 10 cents per gallon over three years. Beginning October 1, 2023, and on July 1 of every other year thereafter, the fuel tax will be indexed to the National Highway Construction Cost. Beginning on July 1, 2023, and every fourth year thereafter, the additional license tax and registration fee specified in this act shall increase by three dollars ($3). Additionally, the bill created new annual registration fees of $200 for electric motor vehicles and $100 for hybrid motor vehicles.

Arkansas SB 336

Imposed a new wholesale tax on fuel that would raise gas prices by 3 cents a gallon and diesel by 6 cents. The new tax will be in addition to the existing taxes on gasoline and diesel and will be calculated annually based on the average wholesale price of the fuels for the previous calendar year.

Illinois SB 1939

Doubled the existing gas tax rate from 19 cents to 38 cents-per-gallon, beginning July 1, 2019. Beginning in 2020, it will be annually adjusted to changes in the Consumer Price Index for All Urban Consumers. Certain counties are now allowed to raise existing local gas taxes. Two additional counties, Lake and Will, are now allowed to implement their own local gas tax of up to 8 cents-per-gallon

Ohio HB 62

Increased the state gas tax by 10.5 cents-per-gallon and the diesel tax by 19 cents-per-gallon. Ohio’s gas and diesel tax, currently at 28 cents a gallon, will go up to 38.5 cents and 47 cents, respectively.

Virginia SB 1716

Imposed a local 2.1 percent tax on the average wholesale price of fuel in districts along the I-81 corridor which raises gas prices by about 7 cents-per-gallon in those areas. The diesel tax will increase to 2.03% of the statewide average wholesale price per gallon, which would begin in July 2021. The revenue generated from the local gas tax and diesel tax will go toward the I-81 Improvement Fund, but other revenue will be distributed to other transportation projects.

California Proposition 6

Proposition 6 was a citizen petition aiming to repeal the tax increases implemented by California Senate Bill 1 (see 2017 Legislation Action). The measure failed with approximately 55 percent of voters choosing to keep the transportation taxes.

Missouri Proposition D

Missouri voters rebuked (53 percent “no” vote) the 10-cent gas tax increase sent to the ballot by the state legislature (see 2018 Legislation Action).

Missouri House Bill 1460

Increased the state motor fuel tax by 10 cents per gallon over four years and dedicated the new revenues to the cost of the state highway patrol. The bill also included tax rate increases for diesel and alternative fuels (natural gas, propane and others). The tax increases included in this bill are subject to voter approval per constitutional restrictions on state revenue collections. Voters did not approve the increases, see 2018 Voter Action for more information.

Oklahoma House Bill 1010

Increased the tax on gasoline by three cents per gallon and the tax on diesel by six cents per gallon. The revenues created by this increase are dedicated to the ROADS Fund which has a statutory cap on total revenues. Thus, this increase allows for an expedited path towards that total cap but effectively does not create an increase in transportation funding as other revenues will be moved out of the ROADS fund. See Oklahoma HB 1014 for additional information regarding the ROADS fund formulas.

California Senate Bill 1

Starting Nov. 1, 2017, this bill increases the state gas tax by 12 cents per gallon and the state diesel tax by 20 cents per gallon. These rates will be indexed to inflation. Additionally, the bill increases various transportation-related fees, including establishing a $100 electric vehicle fee (indexed to inflation) for vehicles model year 2020 and later. Among other provisions, $706 million of diverted transportation funds would be repaid into the transportation account.

Indiana House Bill 1002

Establishes a one-time gas tax increase of 10 cents per gallon and indexes the tax to inflation. Additionally, the bill increases vehicle registration fees by $15 and establishes a new $150 fee for electric vehicles and a $50 fee for hybrid vehicles. The legislation also establishes a framework for implementing tolls on certain highways at the governor’s discretion.

Montana House Bill 473

Increases the state gas tax by 6 cents per gallon incrementally through 2023 and the diesel tax by 2 cents per gallon over the same timeframe.

Oregon House Bill 2017

Increases the state gas tax by 10 cents per gallon incrementally through 2024. Additionally, establishes a new vehicle registration fee schedule based on vehicle fuel efficiency, creates new privilege tax on the sale of motor vehicles, creates a new sales tax on bicycles and establishes a payroll tax increase dedicated to transportation.

South Carolina House Bill 3516

Beginning July 1, 2017, the motor fuel user fee will increase by 2 cents per gallon each year through 2022, for a total of 12 cents per gallon. Additionally, the bill increases the road tax on motor carriers (equal to the motor fuel user fee) and vehicle registration fees. A new biennial electric vehicle fee of $120 is established.

Tennessee House Bill 534

Increases the state gas tax by 6 cents per gallon incrementally over the next three years and the state diesel tax by 10 cents per gallon over the same timeframe. The bill increases vehicle registration fees by $5 and establishes a new electric vehicle fee of $100. Additionally, implements various non-transportation related tax reforms.

Utah Senate Bill 276

Accelerates indexing provisions originally implemented in Utah House Bill 362 (2015, see below). The bill lowers the artificial price floor at which the indexing provisions kick-in and increases the percentage rate tax levied on that price floor. The immediate impact on the gas tax rate is neutral. However, this acceleration is likely to cause increased fuel tax rates in future years.

West Virginia Senate Bill 1006

West Virginia's motor fuel tax is a combination of a flat rate of 20.5 cents per gallon tax and a variable rate tax on the wholesale price of fuel. This bill increased artificial price floor of the 5 percent wholesale tax from $2.34 to $3.04, effectively increasing the variable-rate portion of the fuel tax by 3.5 from 11.7 cents to 15.2 cents per gallon. Additionally, the bill increased the sales tax on motor vehicles and other various motor vehicle-related fees. The increases are effective July 1, 2017.

New Jersey Assembly Bill 12

Effective Nov. 1, 2016, this legislation increases the per gallon tax on gasoline from 14.5 cents to 37.5 cents, and increases, by July 1, 2017, the tax on diesel fuel by 27 cents to 43.6 cents. Going forward, the gasoline tax will be adjusted quarterly based on the price of fuel, however, a price floor and price ceiling exist to limit potential volatility as a result of fuel price and vehicle efficiency.

Additionally, the legislation decreases the general sales tax from 7 percent to 6.625 percent (phased in over two years), eliminates the estate tax, adjusts the retirement income tax exclusion and increases the Earned Income Tax credit.

Georgia House Bill 170

Increases the per-gallon motor fuel tax from 7.5 cents to 26 cents for gasoline and 29 cents for diesel. These rates will be adjusted each year based on the consumer price index. Additionally, the bill will exempt motor fuel sales from state sales tax and permit counties and municipalities to impose a 1 percent use tax on motor fuels.

Further, the bill will establish new $200 registration fees for alternative fuel vehicles and index those fees to inflation. The existing $5,000 tax credit for the purchase of alternative fueled vehicles will be eliminated.

Idaho House Bill 312

Among other provisions, this bill increases state motor fuel taxes by 7 cents per gallon, increasing the current rate of 25 cents to 32 cents. The additional revenue will be split between local governments (40 percent) and the state highway account (60 percent).

Additionally, the bill creates a new electric vehicle registration fee of $140 and a hybrid vehicle registration fee of $75.

Iowa Senate Bill 257

This bill increases the state excise tax on gasoline, diesel and alternative motor fuels by 10 cents per gallon. The new excise tax on gasoline will be 30 cents per gallon. Additionally, the bill increases the excise tax on aviation fuel by 2 cents per gallon, increases fees for excess size and weight permits, and includes various other provisions.

Kentucky House Bill 299

Establishes a new process for how the state determines the “average wholesale floor” price of gasoline. The new process will essentially limit the impact of a decrease in wholesale gasoline prices on the state’s nine percent excise tax on motor fuel.

Michigan HB 4738

This bill, on Jan. 1, 2017, increases the state motor fuel tax on gasoline by 7.3 cents per gallon and the motor fuel tax on diesel by 11.3 cents. After the increase both the tax on gasoline and diesel will be 26.3 cents per gallon. Beginning on Jan. 1, 2022, both motor fuel taxes will be indexed to inflation.

Nebraska Legislative Bill 610

This bill was vetoed by the governor and subsequently overturned by the legislature. The legislation will, over the next four years, increase the portion of the tax allocated to the state by a ½ cent per year and increase the portion allocated to cities and counties by 1 cent per year. The current total gas tax of 10.3 cents per gallon will increase to 16.3 cents by 2019.

North Carolina Senate Bill 20

This legislation replaces the current gas tax, which is structured to include a flat per-gallon rate and a variable rate, with a flat rate of 34 cents per gallon. Beginning in 2017, this rate will be increased based on population growth and the consumer price index.

South Dakota Senate Bill 1

The bill increases the tax on motor fuels by 6 cents per gallon to 28 cents. Additionally, the bill increases certain license plate fees and adjusts the excise tax on special fuels.

Utah< House Bill 362

Among other provisions, this bill replaces the current gas tax of 24.5 cents per gallon with a 12 percent tax on the average rack price of a gallon of gas, effective Jan. 1, 2016. For purposes of calculating the fuel, the average rack price cannot fall below $2.45 per gallon after 2019 and will be tied to the consumer price index.

Washington Senate Bill 5987

Increases the state tax on motor fuel and special fuel by 7 cents per gallon on Aug. 1, 2015, and an additional 4.9 cents per gallon on July 1, 2016. The revenues from the increase will be placed in the newly created connecting Washington account and will be limited to approved transportation projects.

Michigan Ballot Proposal 1

Voters rejected Ballot Proposal 1, which would have, among other provisions, created a variable-rate gas tax. The proposal failed with just over 80 percent of voters opposed.

Michigan House Bill 5477

As part of an 11-bill transportation funding package, this bill, among other changes, replaces the current fixed motor fuel tax with a variable tax based on wholesale prices. Effective Oct. 1, 2015, the current fixed rates of 19 cents (gasoline) and 14 cents (diesel) will be replaced with a tax based on 14.9 percent of the wholesale prices of each fuel. The bill contains a mechanism to protect against large swings caused by volatile fuel prices, limiting increases to no more than 5 percent. Other bills in the transportation package exempt motor fuels from the state sales tax and adjust the state sales tax accordingly (HB 4539 and HB 5492). This package was rejected by the voters in May 2015, see 2015 Voter Actions.

New Hampshire Senate Bill 367

Among other provisions, this bill makes a one-time increase to the state tax on motor fuels, effective July 1, 2014. The increase is to be calculated according to the change in the Consumer Price Index from 2003 to 2013 (estimated at a 4.2 cent increase over the current rate of 18 cents per gallon). It also repeals the increase when the bonds authorized for a project to widen a portion of Interstate 93 are paid in full, or 20 years after the initial issuance of the bonds, whichever is earlier.

Rhode Island House Bill 7133

This budget bill does not increase the gas tax outright, but it does index it to inflation, which is expected to raise the rate in future years. Among other provisions, the legislation indexes the gasoline tax to the Consumer Price Index for all Urban Consumers (CPI-U) beginning July 1, 2015, and every other year thereafter. The calculated rate is to be rounded to the nearest $0.01 increment and the total tax must not fall below its current rate of $0.32 per gallon.

Massachusetts Ballot Question 1 Vote Info

Voters approved Ballot Question 1, which repealed the indexing requirements of House Bill 3535 (2013). The initiative petition passed with just under 53 percent of the vote.

Maryland House Bill 1515

Among other provisions, this bill indexes motor fuel tax rates to the Consumer Price Index starting in FY 2014 and limits the increase to no more than 8 percent of the rate effective in the previous year. It also phases in a new sales and use tax equivalent rate on motor fuel (based on a percentage of the retail price), with the final rate contingent on whether federal legislation on out-of-state sales tax collection is enacted by Dec. 1, 2015. In addition, the legislation requires the Maryland Transit Administration (MTA) to index transit fares to inflation starting in FY 2015.

Massachusetts House Bill 3535

Among other provisions, this bill increases the gas tax from 21 cents per gallon to 24 cents per gallon from July 1, 2013, to Jan. 1, 2015. Starting in 2015, the rate will be indexed to inflation.

Pennsylvania House Bill 1060

Among other provisions, this comprehensive transportation funding package repeals the state’s cents-per-gallon fuel tax as of Jan. 1, 2014, and replaces it with an increased rate on the oil company franchise tax. This increased rate is achieved by raising and removing the cap on the average wholesale price of fuels subject to the tax. Beginning Jan. 1, 2017, the cap is eliminated and a $2.99 floor is put in place. The bill also raises various fees to the rate of inflation and indexes them to inflation thereafter; increases funding for multimodal and public transportation; and creates an optional county vehicle registration fee.

Vermont House Bill 510

This bill imposes a 4 percent tax on the average retail price of gasoline over two years (within limits) while also lowering the cents-per-gallon gas tax by a total of 6.9 cents per gallon. It is predicted to yield a net gas tax increase of 5.9 cents per gallon in FY 2014. The bill also raises the diesel tax by 3 cents per gallon over two years.

Virginia House Bill 2313

This legislation repeals Virginia’s cents-per-gallon gas tax entirely. In place of the previous 17.5 cents-per-gallon tax, the bill 1) establishes a percentage-of-wholesale-price tax of 3.5 percent for gasoline and 6 percent for diesel, with additional rate increases contingent on whether federal legislation on out-of-state sales tax collection is enacted by Jan. 1, 2015, 2) increases the dedicated share of existing general sales tax revenues used for transportation from 0.5 percent to 0.675 percent, and 3) also raises the sales tax itself by 0.3 percent across the state, with the additional revenues also to be allocated to transportation purposes. The bill further creates a $64 annual fee on hybrid, alternative fuel and electric vehicles. (The fee for hybrid vehicles was repealed in 2014.)

Wyoming House Bill 69

This bill raises the total tax on gasoline and diesel from 14 cents per gallon to 24 cents per gallon, effective July 1, 2013.

District of Columbia Bill 20-199 §7291

A provision within the budget bill replaces the previous cents-per-gallon gas tax with a tax that is 8 percent of the average wholesale price. For the purposes of this calculation, the average wholesale price cannot be less than $2.94 and it cannot vary by more than 10 percent of the average wholesale price for the previous six-month period.