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Motor Fuels Taxes

Different transportation fuels power different vehicles and the tax treatment of these fuels also differs. At the federal level, diesel tax revenue makes up 40% of all motor fuel taxes and this proportion has not changes much over the last ten years.

States and the federal government levy taxes on transportation fuels, primarily gasoline and diesel fuel. These motor fuels in large part pay for transportation infrastructure projects including routine maintenance of roads, highways, bridges, tunnels and many other pieces of transportation infrastructure. The tax treatment of both fuels is much different as are the uses of the fuels. Gasoline is primarily the fuel for passenger vehicles. Over 95% of cars and light trucks are powered by gasoline. Diesel fuel is primarily the fuel of work. Three out of every four commercial vehicles are powered by diesel fuel while the largest of these trucks, Class 8 vehicles, are almost exclusively powered by diesel.

Federal Excise Tax

Federal taxes on motor fuels are levied on the gallons delivered to the consumer. As the use of motor fuels is different, so too are the tax rates. The federal tax rate on diesel is 6 cents higher ($0.244/gallon) than gasoline ($0.1844/gallon) in large part to account for the greater weight of commercial vehicles and “wear and tear” imposed on transportation infrastructure by commercial vehicles.

According to the Federal Highway Administration, about 40% of motor fuels taxes is derived from the sale of diesel fuel and other motor fuels such as natural gas and propane. Over the past ten years, federal motor fuels tax revenue has not changed much and diesel tax revenue consistently represents about 40% of total motor fuels tax revenue.

State Excise Tax

States and sometimes municipalities and counties, also levy additional motor fuels taxes. These taxes and fees are not uniform across all states. Sometimes they include statewide or regional sales taxes or other fees on the distribution of fuels. On average, state and federal taxes on diesel exceeds state and federal taxes on gasoline.

California is the state that has the largest discrepancy between gasoline and diesel with diesel consumers spending 34 cents more per gallon of diesel in tax than gasoline. Florida is home to the smallest discrepancy with diesel consumers pay 1 cent less in total motor fuels taxes than gasoline consumers.

State	Total Taxes on Diesel  (cents per gallon)	Total Taxes on Gasoline  (cents per gallon)
California	106.11	71.89
Pennsylvania	99.50	77.10
Arizona	51.40	37.40
New Jersey	68.60	55.50
Indiana	72.40	60.30
New Mexico	47.28	37.28
Illinois	63.56	53.62
Virginia	50.49	40.80
Georgia	59.19	49.99
Hawaii	73.00	64.43
Connecticut	66.10	57.70
Iowa	56.90	48.90
Kansas	50.43	42.43
Vermont	56.40	49.12
Maine	55.61	48.41
Arkansas	47.20	40.20
Alabama	46.29	39.31
Michigan	67.68	60.78
Maryland	58.95	52.20
Montana	56.90	50.65
Alaska	36.77	30.70
District of Columbia	47.90	41.90
Idaho	57.40	51.40
Louisiana	44.41	38.41
Massachusetts	50.94	44.94
Minnesota	53.00	47.00
New Hampshire	48.23	42.23
North Carolina	59.75	53.75
North Dakota	47.40	41.40
Ohio	52.41	46.41
Rhode Island	58.40	52.40
South Carolina	45.15	39.15
South Dakota	54.40	48.40
Texas	44.40	38.40
Utah	53.81	47.81
Washington	73.80	67.80
West Virginia	60.10	54.10
Wisconsin	57.30	51.30
Wyoming	48.40	42.40
Missouri	41.70	35.75
Mississippi	42.80	37.19
New York	68.14	62.70
Nebraska	53.10	47.70
Oregon	60.41	55.17
Delaware	46.40	41.40
Colorado	44.90	40.40
Kentucky	47.40	44.40
Oklahoma	38.40	35.40
Tennessee	46.80	43.80
Nevada	52.96	51.92
Florida	58.77	59.99

Source: API, Motor Fuels Taxes (March 2018)

Learn More:

What is the price difference between gasoline and diesel? https://www.eia.gov/petroleum/gasdiesel/

What is the difference between gasoline and diesel? https://www.eia.gov/energyexplained/index.cfm?page=diesel_home#tab2