States With the Highest and Lowest Gas Taxes

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At the start of this 2018, seven states raised taxes on gasoline, while two states lowered the tax. Pennsylvania lowered taxes by six tenths of a cent, but the state still has the highest gas taxes in the country.

The American system of roads and highways is in drastic need of major overhaul, and that resources needed to make that happen largely depends on money fuel taxes that are primarily set aside for road construction and repair. These funds are raised from a federally imposed 18.4 cent tax on every gallon of gas purchased on American soil, a figure that was last updated in October 1997.

Just as the cost of gasoline varies considerably from state to state, so does the effective tax rate. On top of the federal tax, each state collects its own tax on every gallon of gas sold. Total taxes and fees before the federal tax can be as low as 12 cents per gallon in some cases and as high as nearly $1.00 in others. 24/7 Wall St. reviewed the amount each state levies per gallon of fuel to identify the states with the highest and lowest gas tax.

Click here to see the states with the highest and lowest gas taxes.

Just like federal taxes on gasoline, state-imposed gas taxes are primarily used for road repair and new road construction. But they also may serve to reduce wear and tear on the road by limiting use of the roads. Gas taxes are designed to function as a sort of user fee and also a deterrent.

Both these reasons are meant to improve road quality, but if the connection between high taxes and better road quality exists, not enough time has passed for some of these states. The five states with the highest gas taxes also have among the largest proportions of total roadways in less than optimal condition.

A large share of the nation’s roads are in mediocre to poor condition. According to a report released by the American Society of Civil Engineers, some 21% of major U.S. highways have “poor pavement condition.” In some parts of the country, the problem is far more pronounced. In Rhode Island and Massachusetts, over 30% of roads are in sub-optimal condition.

Partially because gas levies can be so politically unpopular, some states have not increased per-gallon taxes in decades. Even the federally imposed 18.4 cent gas tax has remained the same since 1997. For the most part, the states that increased taxes already had high gas taxes. New York, which added 0.65 cents in taxes to every gallon of gas, now has the fifth highest gas taxes. This pattern is not universal, however. In South Carolina, a state with exceptionally low gas taxes, gas taxes increased on Jan. 1, 2018.

The amount a state chooses to tax per gallon of gas is only one factor contributing to prices at the pump. The most significant contributor to the cost of gasoline across the country is the price of crude oil, which is largely dictated by global supply and demand. Refining costs also comprise a considerable share of the final price at the pump.

The differences in gas prices between states are largely determined by both taxes and fuel transportation costs related to the distance from supply sources such as refineries and pipelines. In general, gas prices tend to be higher in states with higher gas taxes. Depending on the state, gas taxes, including the 18.4 cent federal tax, account for anywhere between 4.0% and 20.8% of the total per-gallon cost.

To identify the states with the highest and lowest gas taxes, 24/7 Wall St. reviewed state and average local gas taxes from the American Petroleum Institute. Average gas prices as of January 24, 2018 for each state came from AAA’s Daily Fuel Gauge Report. We also reviewed average annual vehicle miles travelled in each state from the Federal Highway Administration. The share of roads in poor or mediocre condition came from the American Society of Civil Engineer’s Report Card For America’s Infrastructure, which uses data from the Federal Highway Administration. All data are as of the most recent period available.

Editor’s Note: A previous version of this piece featured incorrect ranks for the shares of roadway in sub-optimal condition in each state. The correct ranks have been included for each state.

These are the states with the highest and lowest gas prices.