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Texas Gas Tax Split





More States Raising Gasoline & Diesel Taxes


July 15, 2017


Texas is one of only seven states that have not increased gasoline and diesel tax levels in the past 25 years.  The state’s 20 cent tax per gallon on gasoline and diesel has remained the same since 1991.


With highway construction cost rising every year and greater vehicle fuel efficiency depressing fuel tax revenues, states from coast to coast have reluctantly taken steps to deal with transportation funding shortfalls.  In the past year Indiana, Montana, New Jersey, South Carolina, Tennessee, West Virginia and California have all approved rate increases.

For more than a decade Rep. Joe Pickett, past chairman and dean of the Texas House Transportation Committee, has been making the point that Texas needs to deal with the long decline in the buying power of the fuels tax.


Chairman Pickett and others including members of the Texas Transportation Commission have continued to make the point that even with dedicated funding from Proposition 1 and Proposition 7 more money is needed to keep up with growth and to address the state's biggest highway and bridge projects.

Pickett has encouraged the Texas A&M Transportation Institute to create a series of Texas “Gas Tax Facts” sheets which Pickett promotes in an effort to help more people understand this important source of funding for highway maintenance and improvement. [Download the 2016 Gas Tax Facts]

Pickett points out that the average Texas motorist pays less in fuel taxes today than they did 25 years ago – about $8 a month compared to $10 to $12 a month in 1991.  While fuel costs have tripled over those years, the gas tax has stayed the same.  The 18.4 cent per gallon federal gasoline tax has not been increased since 1993.

The nation’s highest state gasoline tax rates are in Pennsylvania (58 cents) and Washington State (49 cents).  Only Arizona (19 cents), New Mexico (18.9 cents), Oklahoma (17 cents), Mississippi (18.8 cents), Missouri (17.3 cents) and Alaska (12.2 cents) have rates lower than Texas.

While Pickett has consistently been skeptical that the Legislature will vote to increase the fuels tax any time soon, he has called the idea of raising and indexing the Texas gas tax “a no-brainer” when you look at the declining buying power of the current fixed rate.

One fact most Texans find surprising is that 25% of the state motor fuels tax is constitutionally dedicated to fund public education, meaning that only 15 cents a gallon goes to highway investment.


The American Petroleum Institute has created and regularly updates a map showing the effective combined gasoline tax in each state. It reflects both the state rate and the the 18.4 cent federal fuels tax rate. This map shows total rates per gallon as of July 1, 2017. You can download a PDF version of this graphic HERE.


Lawmakers in 24 states have raised or changed their gas taxes since 2013.  That includes states that had resisted doing so for decades like Tennessee and South Carolina.

The Tax Foundation notes that states across the nation have not been able to adequately fund highways because their tax rates were not adjusted to keep pace with rising construction costs and to offset revenue losses from improved vehicle fuel efficiency.  Static rates have resulted in declines in purchasing power. Thirty states and the federal government levy fixed-rate gas taxes where the tax rates does not change regardless of inflation and changes in the vehicle fleet and driving patterns.

This chart was created by the Institute on Taxation and Economic Policy:

Here are some of the changes taking place in other states reported by the Tax Foundation:

Indiana is raising its gasoline tax rate by 9.9 cents and its diesel tax rate by 10 cents due to legislation enacted earlier this year. This marks the state’s first gas tax increase since January 2003. Looking ahead, Indiana’s fuel tax rates will be adjusted between 2018 and 2024 based on a new formula that considers both inflation and the rate of growth in Indiana’s total personal income.

Montana is increasing its gasoline tax by 4.5 cents and its diesel tax by 1.5 cents under legislation enacted this year. This is the first stage of a slightly larger increase that will eventually raise the gas tax by 6 cents and the diesel tax by 2 cents in total. This is Montana’s first gas tax increase in 23 years.

Tennessee is boosting its gasoline and diesel tax rates by 4 cents each on Saturday under legislation enacted this year. This is the first stage of a 3-part increase. By July 2019, the state’s gas tax will have risen by 6 cents, and its diesel tax by 10 cents. The increase marks the first adjustment in Tennessee’s gas tax rate going back to 1989.

West Virginia is raising its gasoline and diesel tax rates by 3.5 cents. Because West Virginia’s fuel tax rates are tied to the price of gas, they have fallen since 2014 and have become stuck at their minimum “floor” amount. The new law increases that floor.

South Carolina is increasing its gasoline and diesel tax rates by 2 cents each. This is the first stage of a 6-year increase that will raise South Carolina’s fuel tax rates by 12 cents per gallon. South Carolina has one of the lowest and most outdated gas tax rates in the country, having last been updated on Jan. 1, 1989.

California is boosting its gas tax rate by 1.9 cents because of a formula that ties the rate to the price of gas. The state’s diesel tax rate will not change on July 1. More significant, however, will be the 12-cent gas tax increase and 20-cent diesel tax increase that will take effect on Nov. 1, 2017.

Maryland is raising its gasoline and diesel tax rates by a modest 0.3 cents each because of an inflation indexing law passed in 2013.

New Jersey is increasing its diesel tax rate by 10.8 cents on July 1, though its tax rate on gasoline will remain unchanged. This is the final stage in a series of increases scheduled under legislation enacted in 2016.