As we gear up for summer travel, it’s important to note that fuel tax rates are changing in eight states nationwide beginning July 1st.
From a 4.3-cent hike in Maryland to a nearly 2-cent drop in Utah, prepare for automatic adjustments at the pump.
Here’s what you need to know to avoid any surprises while hitting the road.
California
Starting July 1st, fuel rates will increase again to keep up with inflation.
Gasoline excise tax will be collected at 57.9 cents per gallon, up by 4 cents, while diesel excise tax will be collected at 44.1 cents per gallon, up by 3.1 cents.
Governor Gavin Newsom has attributed high fuel prices to oil companies and has signed a bill into law to implement price-gouging rules that went into effect on June 26.
Illinois
Due to a cost-of-living adjustment that went into effect on January 1, state excise tax rates on gasoline and diesel rose by 3.1 cents to 42.3 cents and 49.8 cents respectively. A delayed increase that was scheduled for last July, Governor J.B. Pritzker attributed the change to rising inflation and high fuel prices nationwide.
The next hike is set to take place on July 1, with another 3.1 cent boost for gas and diesel excise taxes to 45.4 cents and 52.9 cents, making the diesel excise rate the third highest in the country after Indiana and Pennsylvania.
Indiana
Excise rates on gas and diesel in Indiana are scheduled to increase by one penny each, effective July 1.
This comes as part of a 6-year-old law that requires annual adjustments through 2024, with a cap of one penny each year. However, a new transportation bill was recently signed into law by Gov. Eric Holcomb, which includes a provision to extend the adjustments through 2027.
The gas and diesel rates will now be 34 cents and 56 cents, respectively.
Kentucky
Kentucky will increase its fuel tax rates by 2.1 cents per gallon for both gas and diesel. This is the result of a statute that links fuel taxes to wholesale fuel prices, which have risen since Gov. Andy Beshear froze the rates last year.
The new tax rates will be 28.1 cents per gallon for gas and 25.1 cents per gallon for diesel.
This change will impact drivers and businesses in the state, but it will also generate revenue to support the maintenance and improvement of Kentucky’s transportation infrastructure.
Maryland
As part of a decade-old inflation indexing law, both gas and diesel taxes will rise by 4.3 cents. This means the gas tax will jump from 42.7 cents to 47 cents, and the diesel rate will increase from 43.45 cents to 47.75 cents.
However, this is not a surprise – Maryland law allows for fuel rates to be adjusted annually based on the consumer price index. Keep in mind that these two rates have increased by a total of 10.9 cents over the past two years.
Missouri
Missouri’s fuel tax rate is set to increase again on July 1st. This is the third out of five planned increases that were put in place by a 2021 law to raise the state’s tax rate from 17 cents to 29.5 cents by July 2025.
The first two increases have already taken effect, bringing the current rate to 24.5 cents.
Despite these changes, Missouri motorists can apply for refunds of the additional tax amounts.
Unfortunately, an attempt to extend this refund option to all Missouri vehicle owners, including truck drivers, failed to pass in the statehouse this year.
Utah
Thanks to a decision by Governor Spencer Cox, Utah will depart from the national trend of increasing fuel tax rates. Utah currently has a 36.4-cent tax on gas and diesel purchases – an increase of 4.5 cents from last year. However, this is set to change.
The state’s tax commission adjusts the fuel tax rate each July using a calculation based on 16.5% of the average fuel price charged by refineries. The new law changes this calculation and as a result, the tax rate will lower to 34.5 cents starting July 1.
This change will result from dropping the rack rate to 14.2%. However, it is estimated that rates will increase to as much as 42 cents per gallon by 2028. While the change is estimated to reduce tax revenues by roughly $35.4 million in fiscal year 2024 and another $31 million the following year, a new law adds a 12.5% tax on electricity from electric vehicle charging stations to help cover the loss.
Virginia
Virginia’s gas and diesel excise rates will undergo a slight upward adjustment at the start of next month. The current excise rate of 28 cents/gallon on gasoline will be raised to 29.8 cents/gallon, representing an increase of 1.8 cents.
Similarly, the existing diesel rate of 28.9 cents/gallon will be increased to 30.8 cents/gallon. Moreover, the wholesale tax on fuels will also go up, with the gas rate rising from 8.2 cents/gallon to 8.8 cents/gallon and the diesel rate going up from 8.3 cents/gallon to 8.9 cents/gallon.
This move will result in Virginia’s gas tax reaching 38.6 cents/gallon and the diesel tax becoming 39.7 cents/gallon.
The state’s tax hike is a result of indexation to yearly changes in the consumer price index.
Source: Land Line
