The Tax Foundation this week released the results of its nationwide roundup of total gasoline tax rates in all 50 states and, as of January 2024, New Jersey’s rate ranked the 8th highest in the U.S. at 42.35 cents per gallon.
States levy taxes on fuel in a few different ways, including sales taxes, excise taxes per gallon purchases at the pump, and taxes on wholesalers or retailers, which generally get passed on to consumers via increased prices. These taxes, combined with a myriad of fees, add to the price consumers pay at the pump.
The Tax Foundation said it combined these taxes and fees to calculate the total tax rate on gas for each state as of Jan. 1. New Jersey’s 42.45 cent rate as of the start of 2024 does not include a 2-cent tax increase approved in March as part of the reauthorization of the state’s Transportation Trust Fund.
California pumps up its gas tax the most at 68.1 cents per gallon (cpg). The other states with gas taxes higher than New Jersey are Illinois (66.5 cpg), Pennsylvania (58.7 cpg), Washington (52.8 cpg), Indiana (51.7 cpg), Michigan (48.0 cpg), and Maryland (47.19 cpg).
The lowest gas tax rates are levied in Alaska (8.95 cpg), Mississippi (18.4 cpg) and Hawaii (18.5 cpg). These rates don’t include the effects of cap-and-trade carbon policies or low carbon fuel standards, which drive prices even higher in California, Washington, and select northeastern states, the Tax Foundation said.
The gas tax is intended to function as a user fee, charging drivers to pay for the construction and maintenance of the roads they drive on. However, the gas tax’s effectiveness as a user fee for road use is “steadily diminishing” because of the increase in electric vehicles and more fuel-efficient gas-powered cars that don’t need to be filled up as often, the Tax Foundation said.
To see the Tax Foundation’s report, based on January updates to U.S. Energy Information Administration data, go here.
