Another Top-10 List — State Gasoline Taxes

Immediately after writing about car and light-weight truck sales being at an almost eight-year high, one of the readers texted back that our vehicles are getting older due to high gasoline costs limiting how much American’s drive. Drive less and the car lasts longer. And then another similar response came.

I commented back to them that a substantial portion of gasoline costs were taxes – both the 18.4 cents per gallon federal excise tax and the respective state tax.

To grasp the full impact of a tax, you need to put it in perspective to the value of the product that is being taxed. The U.S. Department of Energy systematically surveys 900 retail outlets across the country regarding gasoline cost. The following graph shows the average price per gallon of regular gasoline. It includes all taxes and is based on self service prices (except for those states which ban self-service gasoline — New Jersey and Oregon). Depending on the market and time of year, it includes all taxes (state and federal excise) plus conventional and reformulated mixes. [Reformulated gasoline is blended to burn more cleanly and is mandatory in some markets where smog and air quality are issues].

6-7-14 graph1

Just this week, the Tax Foundation released a map and brief article on state gasoline taxes.

The average price per gallon of regular in May was $3.601. Subtracting the 18.4 cents federal excise tax leaves $3.417 per gallon. Then subtracting the median state gasoline tax of 26.5 cents results in an estimated pre-tax cost per gallon of $3.152. Thus, the typical taxes per gallon of gasoline represents 12.4 percent of the total cost.

That, however, varies significantly from state-to-state. California, for example, has a gasoline tax per gallon of 52.89 cents per gallon – double that of the U.S. median, while Alaska at 12.4 cents per gallon, is less than one-half the national median state tax.

So what are the individual state taxes per gallon on gasoline?

6-7-14 graph2

To see the map of taxes from the Tax Foundation, click

Are gasoline taxes limiting how much people drive and ultimately extending the typical vehicle life? I doubt it. I can recall driving through Germany in 2005 and paying an equivalent of $7.00+ per gallon. Germans love their cars. Not only that, when a gallon of regular gasoline today costs less than a cup of coffee from your favorite Barista, it obviously is not too expensive.

However, depending on what you drive (fuel efficiency), where you drive (state gasoline taxes) and how much you drive, these taxes can add up.


Leave a Reply