Texas Gas Tax: 20 Cents

(Flat rate not adjusted since 1991)

More States Raised Gas Taxes in 2019

 

A total of 31 states have raised or revised their gasoline and diesel fuel taxes in the past decade.  Texas is not one of them.  The Texas gas tax rate remains 20 cents per gallon where it was set by the Legislature in 1991.


Ohio, Illinois, Alabama and Arkansas joined the parade to higher rates in 2019.


State lawmakers have been forced to decide that outdated gas taxes need to be raised and reformed to fund to deal with aging highways and the growing need for more capacity.  The buying power of gas tax revenues has eroded dramatically in recent years by greater fuel efficiency, alternative fuels and rising construction costs.


In the past six years eight states have abandoned fixed rate gas tax level like the 20-cent tax in Texas.  They have moved to variable rate gas tax structures that will allow them to raise more sustainable gas tax revenues in the future.  In all 22 states now have variable-rate gas taxes.


Several bills were introduced in the 2019 session of the Texas Legislature to index fuels taxes to some inflation index but none passed.


In fiscal 2018, Texas motor fuels taxes brought in $3.7 billion, about 6.6 percent of all state tax collections. In that year, they were the state’s fourth-largest source of tax revenue after the sales tax, the motor vehicle sales and rental tax and the franchise tax.


The majority of motor fuels tax revenue in Texas is used for transportation projects. In addition to the 20-cent per gallon rate in Texas, the federal government imposes taxes of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel.


2019 INCREASES


Ohio raised rates by 10.5 cents on gasoline and 19 cents on diesel.


Illinois raised the gas tax by 19 cents and the diesel tax by 24 cents.  The gas tax will also be indexed for inflation to maintain purchasing power.


Arkansas added a new tax equal to 1.6% on the average wholesale price of fuel

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Alabama will raise rates in increments:  6 cents in 2019, 2 cents in 2020 and 2 cents in 2021.  Beginning in 2023 Alabama will use a variable-rate formula based on the highway construction index.

 


COMPARING STATES

The American Petroleum Institute map above shows how gasoline tax rates compared by state in 2019.  The state rates shown are a combination of the state rate and the 18.4 cents federal gas tax.
The national average is 54.5 cents.  California has the highest state rate at 61.2 cents (79.6 total), followed by Pennsylvania, Illinois and Washington State.  Alaska, Missouri and Mississippi have the lowest rates.

 

THE TEXAS CHALLENGE
The Texas Transportation Plan 2040 identifies several major challenges facing the state, including aging highways and bridges, inflation, greater fuel efficiency and shaky funding from a federal Highway Trust Fund it describes as “near insolvency.”  Texas’ motor fuels taxes fail to produce the revenue needed to meet these challenges.
Since 1990, Texas’ population has risen by 55 percent while Texans’ average daily vehicle miles traveled have increased by 70 percent. TxDOT’s transportation plan estimates the state’s population will rise to 45 million by 2040, putting further strains on an already overburdened road infrastructure.

 

9/24/19