States With the Lowest (and Highest) Gas Taxes

As gas prices continue to fall, some Americans believe that the federal government should raise its gas tax, which has been unchanged at 18.3 cents per gallon since 1993. Yet, despite a clear need to bolster transportation and infrastructure funding, which often comes from taxes on gasoline, Congress appears to have little interest in raising the fuel tax.

With the federal government apparently disinterested in raising fuel taxes, some states have taken the lead in funding transportation. According to Michael Green, a spokesman for AAA, “Many states have taken it upon themselves to address the challenges associated with paying for roads, and other transportation projects.”

24/7 Wall St. reviewed effective gas tax rates in each state, as summarized by the American Petroleum Institute. We then compared the state’s tax rate against the average gas price in the state. The share of fuel prices that are paid in taxes and fees has risen as gasoline has gotten cheaper. In a few states, taxes make up 15% or more of the price per gallon, including accounting for more than 21% of the gas price in Pennsylvania. Still, taxes in eight states account for less than 10% of the retail price of gas.

Not every state with a low gas tax, relative to the national average price, has a major incentive to increase the amount consumers pay. For instance, Alaska derives much of its tax revenue from oil production, and has historically had less use for a gas tax. However, in some states, the argument for a higher gas tax is likely more compelling. For New Jersey, which has the second lowest fuel tax and is constrained by substantial debts and pension liabilities, a gas tax hike could help it improve its infrastructure.

In some instances, states may not have the ability to raise more revenues from gas taxes, however. New Yorkers already pay more than 45 cents per gallon in fuel taxes, and generally face one of the nation’s highest tax burdens. Thus, even at current low prices, it may be politically difficult for the state to raise fuel taxes.

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