Drivers in California are paying the highest state gas tax in the nation, totaling 73.6 cents per gallon, according to recent data. This figure is part of a broader trend across the U.S. where state gas taxes can add up to 75 cents per gallon, with significant regional variations.
While California leads with its high gas tax, other states also impose substantial taxes. Illinois follows with 70.4 cents per gallon, followed by Indiana at 63.1 cents, Washington at 60.2 cents, and Pennsylvania at 58.7 cents. In contrast, New York has one of the lower state gas taxes at 24.2 cents per gallon, and Alaska has the lowest at 8.9 cents per gallon.
Beyond traditional gas taxes, which are typically user fees for road maintenance, environmental programs also contribute to the retail price of gasoline. These include carbon taxes, cap-and-trade systems, and clean fuel standards, which are designed to influence consumer behavior and reduce fuel consumption. In California, the state's cap-and-trade program is estimated to add about 23 cents per gallon, and its Low Carbon Fuel Standard can add between 19 and 52 cents per gallon. These factors combine to create a total direct and indirect tax and regulatory burden that can approach $1.16 per gallon for drivers in the state.
Local fuel levies can further increase costs. For example, local taxes in Maui, Hawaii, can add up to 24 cents per gallon. In Washoe County, Nevada, local indexing levies contribute a significant 67.8 cents per gallon, surpassing the state tax rate in most other states.
Factors such as global gas supply disruptions, like those stemming from conflicts in the Middle East, can exacerbate price increases, particularly in states like California and other West Coast states. These regions have lower refining capacity and higher transportation costs, making them more susceptible to price shocks. Additionally, states that calculate gas taxes as a percentage of the price, such as Indiana, can see their tax revenue fluctuate with global market prices.
As more drivers transition to electric vehicles, states are facing a decline in revenue from gas taxes. In response, many are exploring new revenue streams, including additional fees for electric vehicle owners and considering a shift from gas taxes to vehicle miles traveled (VMT) taxes. VMT taxes would charge drivers based on the number of miles they drive, moving away from a system that previously penalized vehicles with lower fuel efficiency.