How Much Tax Is There in a Gallon of Gasoline?

by Tim Plaehn, Demand Media Google
    State and federal taxes make up about 50 cents of the cost of a gallon of gas.

    State and federal taxes make up about 50 cents of the cost of a gallon of gas.

    Depending on the amount of driving you do, the regular stops to buy gas for your cars can add up to a significant part of your monthly expenses. Both the federal and state governments collect tax on every gallon you buy. Since consumers in the United States use about 360 million of gallons every day -- according to the U.S. Energy Information Administration -- drivers in the United States contribute a lot of taxes through their gas purchases.

    Federal Excise Tax

    The U.S. government collects tax on gasoline in the form of an excise tax per gallon. As of August 2012, the tax rate was 18.4 cents per gallon of gasoline and 24.4 cents for diesel fuel. The U.S. government first initiated the tax on gasoline in 1932 at a rate of 1 cent per gallon. By 1990, the gasoline tax had increased to 9.1 cents before being increased twice -- to 14.1 cents in December 1990 and to the current 18.4 cents in October 1993.

    State Taxes

    Every state also charges an excise tax on gasoline and diesel fuel. From state to state, there may be additional taxes included in the price of a gallon. Some of the additional taxes can include state sales tax, county and local taxes, inspection fee taxes and underground tank taxes. As of August 2012, nine states did not have additional state or local taxes charged on top of the state gasoline excise tax.

    Average State Taxes

    As of August 2012, the average state excise tax was 21 cents per gallon on gasoline and 19 cents for diesel fuel. The other types of fuels taxes averaged 9.5 cents for gasoline and 10.5 cents for diesel. Added together, the average total state taxes for both types of fuel is about 30 cents per gallon. Adding the 30 cents to the federal gas tax means, on average, U.S. drivers pay 48 cents per gallon in taxes on fuel.

    Highest and Lowest States

    California and New York are tied for the highest total gas tax per gallon at 67.7 cents per gallon. Gasoline tax in Hawaii is just 1 cent lower. Connecticut has the highest tax cut on diesel fuel at 80.6 cents per gallon. Alaska has the lowest gas taxes for both gasoline and diesel. That state takes just 8 cents per gallon for gasoline and diesel to bring the total taxes to 26.4 and 32.4 cents for gas and diesel, respectively. New Jersey and Wyoming are the next two lowest taxing states for gasoline and Oklahoma joins Wyoming as next lowest for diesel taxes.

    About the Author

    Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.

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