What Is the Federal Gasoline Excise Tax Rate?

The Federal Gasoline Excise Tax Rate Explained

Woman filling up car with gas at a gas station
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Definition

The federal gasoline excise tax rate applies to gasoline and diesel and pays for transportation-related infrastructure projects, as well as mass transit costs across the U.S. It's 18.4 cents per gallon for gas, and 24.4 cents per gallon for diesel.

Key Takeaways

  • The federal gasoline excise tax rate is 18.4 cents per gallon. It's 24.4 cents per gallon of diesel.
  • This tax pays for infrastructure projects and mass transportation costs and includes a .01 cent per gallon fee that goes to the leaking underground storage tank (LUST) trust fund.
  • States additionally tack on their own gasoline excise taxes to every gallon you buy, which can significantly increase the overall tax rate.
  • Excise taxes are built into the purchase price of products.

How the Federal Gasoline Excise Tax Rate Works

The federal gasoline excise tax is a tax that was implemented to fund transportation-related projects across the United States. It was first introduced through the Revenue Act of 1932 at a rate of 1 cent per gallon, generating $125 million during its first year. The rate has gone up slowly through the years and currently stands at 18.4 cents per gallon for gas and 24.4 cents per gallon for diesel.

The federal gas tax is an excise tax, which is a type of tax imposed on the sale of specific goods, such as gasoline. These taxes are passed on to consumers because they’re built into the purchase price of the product.

While consumers throughout the U.S. pay the same federal gas excise tax rate whenever they buy a gallon of gas, the total amount they pay for that gas depends on the laws of the state and the locality in which the fuel is purchased. For instance, while drivers in Mississippi pay a total of 36.8 cents per gallon of gas in federal and state taxes, drivers in California pay a whopping 83.5 cents in federal and state taxes on that same gallon of gas.

Federal gas taxes are put into the Highway Trust Fund to pay for infrastructure and transportation costs, and this policy has been a point of contention among many groups over the years. The American Society of Civil Engineers' Report Card for America's Infrastructure notes that more than 40% of the nation's roadways are in "poor" or "mediocre" condition. Some experts say that raising the gas excise tax could help fund improvements.

The federal gasoline excise tax is a combination of two taxes. It includes a fee of .01 cent per gallon for the leaking underground storage tank (LUST), which is added to the tax-per-gallon rate on both gasoline and diesel fuel.

Note

The federal gasoline excise tax rate has been changed 14 times since 1932, but it hasn’t increased since 1997.

The LUST fee goes into a trust fund that was created in 1986. It’s intended to prevent petroleum leaks from federally regulated underground storage tanks. It also funds the oversight and enforcement of petroleum leak cleanups. It pays for cleanup when the responsible party isn’t known, and it funds inspections.

Depending on where you live and how much gas costs in your state, the existing federal gasoline excise tax, and each state’s gasoline tax can already make a big difference in the price you pay at the pump.

Gas prices can differ by state, and they change frequently. For example, on Nov. 9, 2022, California's average gas price was $5.453 per gallon and Virginia's average price was $3.511 per gallon, according to AAA.

State Taxes on Gasoline

In addition to the federal tax, each state tacks on its own tax to every gallon of gas that’s sold there. Here are some of the highest and lowest state gas taxes, according to the American Petroleum Institute:

  • Alaska: 15.13 cents per gallon
  • California: 68.15 cents per gallon
  • Illinois: 59.60 cents per gallon
  • Mississippi: 18.79 cents per gallon
  • Missouri: 19.92 cents per gallon
  • New Jersey: 50.70 cents per gallon
  • New Mexico: 18.88 cents per gallon
  • Pennsylvania: 58.70 cents per gallon

The map below shows the amount of federal and state taxes on a gallon of gas in each state. The average in the U.S. is 57.09 cents per gallon.

Alternatives To Paying the Federal Gasoline Excise Tax

There's not a lot you can do to control the gasoline excise tax rate or the cost of fuel, but you can influence how much you spend by buying less of it. Consider saving on fuel costs by taking public transportation or combining trips, such as running errands on your way home from work, if the cost of gas is wrecking your monthly budget, whether due to a long commute or a travel-heavy job. Carpooling with co-workers is also an excellent way to save cash and will save you that rush-hour headache.

Try using apps that help you save money on gas by locating the cheapest options in a given area. Some will even reward you with loyalty points and other perks when you use their apps.

Frequently Asked Questions (FAQs)

Why does an excise tax on gasoline exist?

Federal and state governments charge an excise tax on gasoline to raise money for infrastructure projects and to help pay for mass transportation.

How much is the federal excise tax on gasoline?

The federal excise tax on gasoline is 18.4 cents per gallon. There is also a federal excise tax on diesel and that rate is 24.4 cents per gallon.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Energy Information Administration. "Frequently Asked Questions (FAQs): How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel?"

  2. Energy Information Administration. "Frequently Asked Questions (FAQs): How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel?" Click on "State-by-state fuel taxes" to download data.

  3. American Society of Civil Engineers. "Report Card for America's Infrastructure."

  4. Congressional Research Service. "The Federal Excise Tax on Gasoline and the Highway Trust Fund: A Short History."

  5. Environmental Protection Agency. "Leaking Underground Storage Tank (LUST) Trust Fund."

  6. AAA. "Gas Prices."

  7. American Petroleum Institute. "Gasoline Tax."

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