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7 states hiked fuel tax rates on July 1

July 14, 2024

Road-trip_family-car

For most U.S. families, summer vacation involves a road trip. Taking to the country’s highways is a chance to enjoy new landscapes, listen to (and sing along with) favorite playlists, and share time with the family.

Road trips also mean stops for fuel, both for auto occupants and the vehicle.

The good news for summer 2024 drivers is that the cost of gasoline isn’t that bad. AAA data show that the average price of gas as of mid-July is just more than $3.50 a gallon. That’s the same as the average price per gallon in 2023.

Motorists in seven states, however, might see their pump prices bump up bit thanks to increases in state fuel excise taxes that took effect on July 1.

You’ll hear the most complaints from drivers in California and Illinois, which now rank first and second, respectively, in this tax category.

California's gas tax edged up from 57.9 cents per gallon (cpg) to 59.6 cpg. Diesel-fueled vehicles also saw an increase, from 44.1 cpg to 45.4 cpg. But when other state taxes and fees — the low-carbon fuel standard, the cap-and-trade program, state and local sales tax, and the underground storage fee — are added in, Golden State drivers effectively pay around 70 cents in assessments for a gallon of fuel.

Illinois' gasoline tax hike this month was to 47 cpg, up from 45.4 cpg. The Prairie State’s s diesel excise tax went from 52.9 cpg to 54.5 cpg. The levies are part of the Rebuild Illinois capital plan, which has been upping fuel taxes since 2019. That year, lawmakers doubled the gas tax from 19 cpg to 38 cpg, with annual increases tied to inflation.

Illinois also collects sales tax on top of its fuel taxes, meaning its motorists pay the second most in gas taxes, behind only California, and the highest in the Midwest by far, according to Dylan Sharkey of the Illinois Policy Institute.

Elsewhere across the United States, five other states also upped their fuel tax rates this month.

Colorado’s July 1 gas tax hike is less dramatic. It went up half a cent to 22 cpg. But when you add in road usage and environmental fee hikes, the total gas tax in the Centennial State is 27.9 cpg.

Indiana increased its gasoline tax, going from 34 cpg to 35 cpg at the start of July. Hoosier drivers of diesel and biodiesel fueled vehicles are now paying 59 cpg for that fuel, up two cents.

Missouri's excise tax on gas and diesel is the same. So, Show Me State drivers of those vehicles new face a nearly a 3-cent increase tax increase, from 24.5 cpg to 27 cpg. Right now, plans are for the state’s fuel tax rate to jump again on July 1, 2025, to 29.5 cpg.

Nebraska motorists now have a small, half-cent hike in their gasoline prices. The Cornhusker State’s motor fuels tax rate on July 1 went from 29.1 cpg to 29.6 cpg.

Virginia drivers now face a 30.8 cpg gas tax, up from 29.8 cpg. Diesel drivers in the Old Dominion will pay 31.8 cpg for that fuel, up from 30.8 cpg. Taxes for blended diesel and gasoline fuel mixtures in Virginia also by the same levels.

These state fuel taxes are in addition to the federal levies. Uncle Sam collects 18.4 cpg on gasoline, a tax rate that’s been stalled there since Oct. 1, 1993, and 24.4 cpg on diesel.

And while some of the increases are relatively small, price conscious consumers are watching every penny, or as in the case of some fuel hikes, half pennies. That’s why the seven states with gas tax hikes are this weekend’s By the Numbers figure.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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