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Have you wondered whether the gas price you pay is more than the state adjacent to you? Or have you wondered where those taxes go? Most states only use revenue from fuel taxes, including jet fuel, for transportation projects like highway and bridge construction. Pay attention, because on July 1, California, Illinois, and Kentucky increase their gas tax. That means other states are cueing up to do the same.

Oregon was the first state to charge a gas tax back in 1919. Thanks, Oregon. There is also a Federal Motor Fuel Tax, instituted in 1932. It gets added to the state gas tax. Federal motor fuel tax rates are $0.184 / gallon for gasoline and $0.244 / gallon for diesel fuel. The good news is that this amount hasn’t been raised since 1993. If it were to be indexed with inflation rates, it would be almost 100 times more today.

How much is each state’s gas tax going up?

Every July, California’s gas tax increases, just in time for you holiday travelers. This time it’s only three cents, but it comes to 58 cents per gallon. In 2010, the tax amounted to 18 cents. So it creeps up quicker than you think.

In Illinois, the increased gas tax is also three cents. And this year, the Land of Lincoln also gets a groceries tax increase of 1%. “What we did last year was a temporary measure because we had a very high inflation,” says Governor JB Pritzker.  “The inflation, you may notice, has come down.  But we had very high inflation and wanted to do everything that we could.  We provided 1.8-billion dollars of tax relief for families across Illinois.”

Swinging into Kentucky, its gas tax increases by 2.1 cents per gallon says the Courier-Journal. “We are doing everything we can to try to help keep more money in the pockets of our hard-working Kentucky families, and to provide some relief in these challenging times,” says Governor Andy Beshear. The funds go to the Kentucky Road Fund which disperses the money for new road construction and maintenance.

What’s the average national gas price for the fourth?

Shell gas station in Orange, CA.
Orange County average price rose 8.8 cents, its 29th record in 34 days | Gary Coronado / Los Angeles Times via Getty

Nationally, the average price for a gallon of gas is $3.573. But in some states, that number is less, and in others, it is a lot more. New to the gas tax derby is that Washington State took over the No. 1 spot for the highest gas tax in the country. Pennsylvania and California follow Washington, while Alaska has the lowest gas tax fee, with Hawaii just below it.

While it used to be a fairly standard amount for all of the states, today it is a formula based on the fuel’s weight, cost, inflation, overall vehicle fuel economy, and other mumbo-jumbo.


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