Special Report

States With the Highest (and Lowest) Gas Taxes

Alexander, Thomas C. Frohlich

1. Alaska
> Tax as pct. of gas price: 3.9%
> State fuel tax: 11.3 cents per gallon (the lowest)
> Gas price: $2.91 (2nd highest)

Alaskans pay just 11.3 cents per gallon in gas taxes, the lowest of any state, despite having the second highest gas price in the nation. The state’s economy has historically been dependent on the energy industry, which also accounts for much of its economic activity and tax revenues. However, this also exposes the state to fluctuations in the oil price, including the commodity’s current rout.

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2. New Jersey
> Tax as pct. of gas price: 7.0%
> State fuel tax: 14.5 cents per gallon (2nd lowest)
> Gas price: $2.06 (22nd highest)

New Jersey has the second lowest gas tax in the nation. The price of fuel, however, is relatively high due in large part to a statewide ban on self-service gas stations. Only Oregon has a similar law. While reform advocates argue that lifting the ban would lower gas prices, proponents of the ban argue that full-service stations are a critical source of jobs.

3. South Carolina
> Tax as pct. of gas price: 8.6%
> State fuel tax: 16.8 cents per gallon (3rd lowest)
> Gas price: $1.94 (12th lowest)

Gasoline costs $1.94 per gallon in South Carolina, one of only a few states where gas is below $2 a gallon. As in most states, low gas prices are the result of low taxes. South Carolina has the third-lowest gas tax in the nation. Overall state taxes are quite low as well, in fiscal 2012, the state collected $1,710 per capita in taxes, less than all but two other states.

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4. Oklahoma
> Tax as pct. of gas price: 9.4%
> State fuel tax: 17.0 cents per gallon (4th lowest)
> Gas price: $1.81 (2nd lowest)

Oklahoma levies 17 cents on each gallon of gasoline, the fourth lowest fuel tax nationwide. While the lower gas price is a boon for Oklahoma drivers, the state may have more trouble than others funding infrastructure projects. The state received a close-to-failing grade for its bridges and roads in 2013 from the ASCE, which noted that over 70% of funds from fuel taxes, registration fees and other vehicle-related sources “are diverted to non-transportation purposes.”

5. Arizona
> Tax as pct. of gas price: 9.5% (5th lowest)
> State fuel tax: 19.0 cents per gallon (8th lowest)
> Gas price: $2.01 (21st lowest)

Arizona maintains relatively low gasoline taxes, charging just 19 cents per gallon, among the lowest gas taxes of any state. As a result, less than 10% of the price of gas goes to the state, well below the average nationwide. The lack of competing uses for oil may also help keep gas prices down. According to the EIA, seven of every eight barrels of petroleum used in the state are used for transportation, mostly in the form of gasoline and diesel fuel.