The state Department of Treasury announced Monday that the state’s gas tax will be increasing by 2.6 cents per gallon beginning on Jan. 1, 2025.
The department said that the decision to increase the tax, which generates funds for transportation infrastructure projects, was made “after a thorough review of fuel consumption statistics and consultation with the legislative budget and finance officer.”
The increase is required by a 2024 law that renewed the state’s Transportation Trust Fund and gradually raises the state’s Highway Fuel Cap from Fiscal Year 2027 through FY 2029.
By statute, the FY2025 Highway Fuel Cap for FY 2025 is set at $2.032 billion, which is $84 million or 4.3% higher than the previous baseline of $1.948 billion. Each year the cap will be increased until it reaches $2.366 billion in FY 2029.
“Based on our review of the consumption data, combined with the requirement to meet the new statutory target, we have determined that the new formula dictates a 2.6 cent increase this coming January,” said State Treasurer Elizabeth Maher Muoio. “We are pleased that this dedicated funding stream continues to provide billions of dollars across the State to support our critical transportation infrastructure needs.”
The law that renewed the state’s Transportation Trust Fund, known as Chapter 7, requires the TTF to provide nearly $11 billion over five years to support critical transportation infrastructure improvements. To ensure the state has the funds necessary to support these projects, the law mandates that the Petroleum Products Gross Receipt Tax (PPGRT) rate be adjusted accordingly to generate enough revenue to meet the statutory Highway Fuel Cap for that fiscal year.
What is generally called the “gas tax” or the “highway fuels tax” is actually two separate taxes on gasoline and diesel fuel – the Motor Fuels Tax and the PPGRT. Under the formula provided in Chapter 7, the PPGRT rate will increase on Jan. 1, 2025, from 31.8 cents to 34.4 cents for gasoline and from 35.8 cents to 38.4 cents for diesel fuel.
When combined with the Motor Fuels Tax, which is fixed at 10.5 cents for gasoline and 13.5 cents for diesel fuel, the total tax rates that motorists will pay for gasoline and diesel fuel will be 44.9 cents and 51.9 cents, respectively.
Chapter 7 also imposed a new fee on zero-emission vehicles that do not use gasoline. The fees were set at $250 for 2024 and will increase by $10 each July 1 until reaching $290 in 2028.
