Gasoline Tax Rates

(As of Jan. 1, 2012) in CENTS

American Petroleum Institute graphic

Fuel Tax Hikes Being Discussed by Several States

January 24, 2012


Texas is not the only state with a big highway funding shortfall. 

Several state legislatures are now openly discussing the possibility of hiking fuel taxes.  That includes Pennsylvania, Virginia, Maryland and Iowa.  In almost every state gas tax revenues, adjusted for inflation, have fallen while population has grown and road maintenance requirements and new capacity needs have increased.


These calls for long overdue state fuel tax increases fly in the face of a national poll done in December that found that a majority of American believe new transportation projects should be paid for with user fees instead of a federal gas tax increase.  The Reason-Rupe poll found 77% of Americans oppose increasing the federal gas tax which is currently 18.4 cents a gallon.  Only 19% said they favor an increase.  Some 58% said new road capacity should be funded by tolls.

In Texas the state’s gasoline tax is 20 cents (with 25% of that going to education) for federal-state total of 38.4 cents per gallon.  There are 37 states with higher total gas tax rates including 15 with combined federal/state rates greater than 50 cents per gallon.


In Iowa there is bipartisan support for providing more funding for road repair and upkeep but no agreement on how to fund it.  The chairmen of the state house and senate transportation committees have called for an 8 cent gasoline tax increase from the current state level of 22 cents.  Their plan is to raise the rate 4 cents in 2013 and 4 cents in 2014.  They would also raise vehicle registration fees.  The state’s Republican governor has said he would consider signing such a bill if it did not go into effect until future years.

In Virginia, where the state gas tax has been 19.8 cents for 26 years, members of the legislature have proposed raising the tax by several cents and indexing it for inflation.  Local communities including the City of Virginia Beach has been pushing for a 10 cent increase which would bring in about $500 million a year in much-needed transportation funding for the state. But like elected officials across the country, the Virginia governor and the majority of lawmakers have not given their support to the plan.

In Maryland, where the state gas tax is 23.5 cents, the governor has indicated support without a specific proposal.  Some legislators have proposed a 15 cent increase.  State Sen. Edward Kasemeyer, chair of the budget committee, said a gas tax increase is politically treacherous, yet essential to paying for transportation infrastructure.

In Pennsylvania, where the state gas tax is 32.3 cents, legislative leaders are talking about an increase that would generate annually recurring revenue.  A special advisory commission proposed a plan that would raise about $2.5 billion a year.

A fuel tax increase is not seen as likely in any of these states.  A recent report from the Institute on Taxation and Economic Policy calculated that if every state would raise their gasoline tax just enough to offset buying power lost to inflation over the years it would generate additional state revenues of more than $10 billion a year.

Some Texas lawmakers – particularly the previous chairs of the House and Senate transportation committees – have stepped forward in recent years to support a fuels tax increase as a partial solution of eroding revenues.

In Texas the motor fuels tax and registration fees have remained state for many years.  They fall far short of keeping pace with mounting transportation demands.  In the 20 years since the Texas gas tax was raised the state’s population has grown by more than 6 million and vehicle miles traveled have increased by more than 50%.  Construction inflation increased 65% between 2002 and 2008.  Since the downturn in the national economy, prices have dipped and projects have been built for substantially less.  But as the economy improves, prices are again back on a strong upward trend.