The price drivers pay at the gas pump — an average of $3.45 in June — includes a federal tax of 18.4 cents per gallon, plus state taxes that vary widely.
In seven countries, these state taxes are set to increase during the peak summer driving season. The following list shows the total state taxes for those items, starting July 1:
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California: 69.8 cents per gallon – the highest of all states.
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Colorado: 27.9 cents per gallon.
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Illinois: 67.1 cents per gallon.
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Indiana: 56.1 cents per gallon.
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Missouri: 27.5 cents per gallon.
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Nebraska: 30.5 cents per gallon.
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Virginia: 40.4 cents per gallon.
How will these states raise taxes?
In California, the state’s excise tax on gas will increase from 57.9 cents per gallon to 59.6 cents per gallon, according to the California Department of Tax and Fee Administration. When other state taxes and fees are taken into account, the state tax on a gallon of fuel in California will increase from about 68 cents to about 70 cents.
In Colorado, the state road user fee will increase from 3 cents per gallon to 4 cents per gallon, according to the Colorado Department of Revenue. Additionally, an environmental fee will increase from 0.6 cents per gallon to about 1.3 cents per gallon. Those fees are on top of a 22-cent tax on gas. In total, the state gas tax will increase from about 26 cents per gallon to about 28 cents per gallon.
In Illinois, the state gas tax will increase from 45.4 cents per gallon to 47 cents per gallon, according to the Illinois Department of Revenue. However, the state’s gas tax will increase from 66.5 cents per gallon to 67.1 cents per gallon — the second highest in the nation
In Indiana, the gas tax will increase from 34 to 35 cents per gallon, according to the Indiana Department of Revenue. In addition to that excise tax and the 1 cent oil control fee, the state imposes a gasoline usage tax. This tax rate is adjusted on a monthly basis. In July, the use tax rate will be 20.1 cents per gallon. In total, Indiana motorists’ state taxes will be 56.1 cents per gallon.
In Missouri, the motor fuel tax rate will increase from 24.5 cents per gallon to 27 cents per gallon, according to the Missouri Department of Revenue. Combined with two other fees imposed on a gallon of gas, totaling about half a cent, the state taxes will add up to 27.5 cents per gallon.
In Nebraska, the fuel tax rate increases half a cent to 29.6 cents per gallon, according to the Nebraska Department of Revenue. Combined with an environmental fee, drivers in the state pay 30.5 cents per gallon in state taxes.
In Virginia, the motor fuel tax rate will increase from 29.8 cents per gallon to 30.8 cents per gallon, according to the Virginia Department of Motor Vehicles. Additionally, the state sales tax rate on gas will increase from 8.7 cents per gallon to 9 cents. In total, drivers will pay 40.4 cents per gallon in state taxes.
How gas prices are set
of the price of gas it depends a lot on the price of oil and the cost of its processing. But federal, state and local taxes and fees can add significantly to the total.
On top of the federal gasoline tax of 18.4 cents per gallon, most states impose multiple taxes and fees on a gallon of gas, including some combination of excise taxes (those levied on goods, services, and activities), sales taxes , environmental taxes and inspection fees.
Those costs add up to an average of 32.6 cents per gallon in state taxes, according to a NerdWallet analysis of U.S. Energy Information Administration data. Combined with the federal tax, that’s 51 cents, on average, added to the cost of each gallon of gas.
But state tax rates vary widely. California’s rate (69.8 cents per gallon) and Illinois’ rate (67.1 cents) are the highest, followed by Pennsylvania’s (58.7 cents). Alaska has, by far, the lowest state tax (9 cents per gallon), followed by Mississippi (18.4 cents) and Hawaii (18.5 cents).
In many cases, gas taxes are adjusted annually based on consumer price index, a proxy for inflation calculated by the US Bureau of Labor Statistics. This means that taxes can go up (or down) with the annuity inflation rate. Sometimes states also introduce new or higher fees by gradually increasing them on an annual basis.
As for what happens with that tax revenue, states often use it to fund infrastructure improvements and environmental initiatives.