Attention Drivers: 7 States Will Raise Gas Taxes on July 1

The price drivers pay at the pump — an average of $3.45 in June — includes a federal excise tax of 18.4 cents per gallon, plus state taxes that vary widely.

In seven locations, these state taxes are expected to increase at the height of the summer season. The list below shows total state taxes for these locations, as of July 1:

• California: 69.8 cents per gallon – highest of all states.

• Colorado: 27.9 cents per gallon.

• Illinois: 67.1 cents per gallon.

• Indiana: 56.1 cents per gallon.

• Missouri: 27.5 cents per gallon.

• Nebraska: 30.5 cents per gallon.

• Virginia: 40.4 cents per gallon.

How These States Will Raise Your Taxes

In California, the state gas tax will increase from 57.9 cents per gallon to 59.6 cents per gallon, according to the California Department of Taxation and Fee Administration. When other state taxes and fees are taken into account, the state tax on a gallon of fuel in California will increase from about 68 cents to about 70 cents.

In Colorado, the state’s road use tax will increase from 3 cents per gallon to 4 cents per gallon, according to the Colorado Department of Revenue. In addition, an environmental fee will increase from 0.6 cents per gallon to about 1.3 cents per gallon. These fees are on top of a 22-cent tax on gasoline. In total, the state’s gasoline tax will increase from about 26 cents per gallon to about 28 cents per gallon.

In Illinois, the state gas tax will increase from 45.4 cents per gallon to 47 cents per gallon, according to the Illinois Department of Revenue. Overall, the state gas tax will increase from 66.5 cents per gallon to 67.1 cents per gallon — the second highest in the country.

In Indiana, the gas tax will increase from 34 to 35 cents per gallon, according to the Indiana Department of Revenue. In addition to that excise tax and a 1-cent oil inspection fee, the state charges a use tax on gasoline. That tax rate is adjusted monthly. In July, the use tax rate will be 20.1 cents per gallon. In total, Indiana drivers’ state taxes will total 56.1 cents per gallon.

In Missouri, the fuel tax rate will increase from 24.5 cents per gallon to 27 cents per gallon, according to the Missouri Department of Revenue. Combined with two other fees charged on a gallon of gasoline, totaling about half a cent, state taxes will add up to 27.5 cents per gallon.

In Nebraska, the fuel tax rate goes up half a cent to 29.6 cents per gallon, according to the Nebraska Department of Revenue. Combined with an environmental fee, drivers in the state pay 30.5 cents per gallon in state taxes.

In Virginia, the fuel tax rate will increase from 29.8 cents per gallon to 30.8 cents per gallon, according to the Virginia Department of Motor Vehicles. Additionally, the state’s gasoline sales tax rate will increase from 8.7 cents per gallon to 9 cents. In total, drivers will pay 40.4 cents per gallon in state taxes.

How gas prices are set

O gas price It largely depends on the price of oil and the cost of refining it. But federal, state and local taxes and fees can significantly increase the total.

In addition to the federal gasoline tax of 18.4 cents per gallon, most states levy various taxes and fees on a gallon of gasoline, including some combination of excise taxes (those taxes on goods, services, and activities), taxes on sales, environmental taxes and inspection fees.

Those costs add up to an average of 32.6 cents per gallon in state taxes, according to a NerdWallet analysis of U.S. Energy Information Administration data. Combined with the federal tax, that adds an average of 51 cents to the cost of each gallon of gasoline.

But state tax rates vary widely. California’s rate (69.8 cents per gallon) and Illinois’ rate (67.1 cents) are the highest, followed by Pennsylvania’s (58.7 cents). Alaska has by far the lowest state tax (9 cents per gallon), followed by Mississippi (18.4 cents) and Hawaii (18.5 cents).

In many cases, gas taxes are adjusted annually based on the Consumer Price Indexa proxy for inflation calculated by the U.S. Bureau of Labor Statistics. This means that taxes can increase (or decrease) with the inflation rate. States also sometimes introduce new or higher rates, gradually increasing them annually.

As for what happens to that tax revenue, states typically use it to fund infrastructure improvements and environmental initiatives.

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