New state fuel tax rates, rules kick in July 1

By Keith Goble, Land Line state legislative editor | Tuesday, June 25, 2013

States that have taken action to raise revenue for transportation are days away from getting to collect the new money from truckers and other drivers.

On Monday, July 1, Virginia’s 17.5-cent-per-gallon excise tax on gas and diesel will be replaced with a tax on the wholesale price of fuel.

Gasoline sales will include a 3.5 percent wholesale tax, or “at the rack tax,” and diesel purchases will include a 6 percent levy. The tax rates will rise with inflation.

Included in the state’s five-year, $6 billion transportation funding plan signed into law this spring, the change in tax collection is expected to initially equate to about a 11.7-cent-per-gallon gas rate. The diesel rate is estimated to be 21 cents per gallon.

The state’s general sales tax will also be increased from 5 percent to 5.3 percent. The additional revenue is designated for transportation.

Across the Potomac River in Maryland, a 1 percent sales tax will be applied to fuel purchases at the wholesale level. The change is expected to equate to a 3.5-cent-per-gallon rate increase for gas and diesel. Starting Jan. 1, 2014, it will increase to 2 percent and 3 percent the following July.

In addition, the state’s 23.5-cent-per-gallon excise tax on gas and 24.25-cent tax on diesel will be indexed to inflation, which allows for regular increases.

The tax increases are expected to raise $4.4 billion for transportation projects around the state during the next six years.

Out west in Wyoming a higher fuel tax kicks in the first of the month. Specifically, the state’s 14-cent tax rate for gas and diesel will increase by 10 cents to 24 cents per gallon.

About $72 million in new revenue will be generated in the first year. About $47.4 million will be earmarked for state highways. Counties and cities will receive $16.4 million and $6.7 million, respectively. State parks will claim another $1.2 million.

In Kentucky, the state’s fuel tax rates increase 2.4 cents with the calendar switching to July. Thanks to partially tying the tax rates to the average wholesale price of fuel, the changes to 32.3 cents per gallon for gas and 29.3 cents for diesel are automatic.

The increases are expected to raise about $70 million in one year.

An automatic increase also takes effect in North Carolina. The change will raise the fuel tax rate from 37.5 cents to 37.6 cents per gallon.

Two more automatic increases are slated to take effect in Connecticut. The state’s gross receipts tax, which is a percentage of the wholesale tax on gas, will increase from 7 percent to 8.1 percent. The change is expected to add about 4 cents per gallon to the pump price.

Diesel prices also are on the way up. The state’s 51.2-cent-per-gallon tax rate is scheduled to increase by 3.5 cents to 54.7 cents.

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