Variable Rate Gas Tax

variable rate gas tax
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The federal government and many states are seeing shortfalls in their transportation budgets in part because the gasoline taxes they use to generate those funds are poorly designed. 31 states and the federal government levy “fixed-rate” gas taxes where the tax rate does not change even as the cost of infrastructure materials inevitably increases over time. The federal government’s 18.4 cent gas tax, for example, has not increased in over 22 years. And 20 states have gone a decade or more without a gas tax increase.

Fortunately, there is a growing recognition of the problems with this “fixed-rate” gas tax design. Since 2013, 5 states (Maryland, Pennsylvania, Rhode Island, Utah, and Virginia) as well as the District of Columbia (DC) have abandoned their old gas tax structures in favor of a more sustainable, “variable-rate” design where the tax rate gradually rises alongside gas prices, the general inflation rate in the economy, vehicle fuel-efficiency, or other relevant factors. As a result of these reforms, a majority (54%) of the U.S. population now lives in a state where the gas tax rate tends to grow over time.

The following map highlights the 19 states (plus DC) that levy “variable-rate” gas taxes and identifies the type of variable-rate structure used in each of those states. Currently, there are 7 broad types of variable-rate structures in use across the country. Transitioning toward any of these variable-rate designs at the federal level, and in more states, would put funding for the nation’s infrastructure investments on a much more sustainable course.
ITEP – Most Americans Live in States with Variable-Rate Gas Taxes



  • While the Texas gas tax has stayed the same since 1991, vehicles have improved their mpg which has resulted in less tax revenue for roads and schools


  • coming soon…


PEW – Maryland Governor O’Malley Takes a Risk on Gas Tax

Open Sky Institute – Policy brief: The gas tax and inflation

ITEP – Most Americans Live in States with Variable-Rate Gas Taxes

ITEP – Don’t Blame the Gas Tax for High Gas Prices

The Advocate – Letters: Variable tax on gas could help Louisiana with its budget woes

Six States Have Raised or Reformed Their Gas Taxes This Year

Las Vegas Review Journal – County commissioners look at cap to better sell fuel tax ballot measure

Governing – States, Not Just Feds, Struggle to Keep Gas Tax Revenue Flowing

New York Times – Higher Gas Tax in New Jersey: After Years of No, It May Be Time for Yes

USA Today – These states will hike gas taxes ahead of record 4th of July travel

The Advocate – Louisiana taking close look at gasoline tax, unchanged in more than two decades

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