Gas Tax by State: How Much of Each Gallon Is Tax?

Every gallon of gasoline in the United States carries at least three layers of tax: federal, state, and sometimes local. The federal layer is fixed and known. The state layers are where the differences come from — and they explain a large part of why the same gallon costs $3.63 in Texas and $5.89 in California.

The federal layer: 18.4 cents

The federal gasoline excise tax is 18.4 cents per gallon, plus 0.1 cent for the Leaking Underground Storage Tank Trust Fund. It has been unchanged since 1993. Because it is not indexed to inflation, its real value has fallen by more than half since it was set.

The state layer: flat, indexed, or percentage

States use four different designs, and the design matters as much as the rate:

1. Flat cents-per-gallon excise tax

The simplest model. The rate is set by statute and changes only when the legislature acts. Most states use this for at least part of their fuel tax.

2. Indexed excise tax

The rate adjusts automatically — usually annually — based on inflation, the Consumer Price Index, or a formula tied to wholesale fuel prices. Pennsylvania, Maryland, and several other states use indexation, which means the effective rate rises without a vote.

3. Percentage-based tax (sales tax on fuel)

Some states apply the general sales tax to gasoline, or apply a percentage-based fuel tax. Indiana and Michigan are the clearest examples. This design makes the tax component rise and fall with the pump price, which amplifies price swings for drivers.

4. Local add-ons

Counties and cities can add their own fuel taxes in some states. Florida allows county-level local option taxes; Chicago and Cook County stack city and county taxes on top of Illinois; New York City adds a metropolitan commuter tax.

The states at the extremes

Highest total tax burden: California stands alone. Its excise tax is high, it applies sales tax on top, and its cap-and-trade program adds a carbon allowance cost to every gallon. Pennsylvania is usually second because its wholesale oil company franchise tax functions as a fuel tax. Washington has risen fast because of its Climate Commitment Act.

Lowest total tax burden: Alaska, Mississippi, and Missouri are consistently at the bottom. Alaska’s remote supply costs more than its tax saves; Mississippi’s low tax is one reason its pump price is nearly always the cheapest in the country.

Why you should not rely on a single number

State fuel tax rates change more often than most published tables reflect:

• Indexed states change automatically every January or July.
• Some states suspend or cap their fuel tax temporarily during price spikes.
• Local taxes change at the county and city level, which national tables do not capture.
• California’s cap-and-trade cost varies with allowance auctions.

A table published two years ago can be wrong by 5 to 15 cents in several states. For a decision that matters, check the state revenue department or the federal Highway Administration’s motor fuel tax reports.

How taxes affect the weekly price

Taxes are a fixed cost per gallon in flat-rate states, so they do not move week to week. But they change the share of the price that is tax:

• At $2.50 per gallon with 40 cents of tax, tax is 16 percent of the price.
• At $5.00 per gallon with the same 40 cents, tax is 8 percent.

This is why “taxes are why gas is expensive” is only partly true. Taxes set the floor and the state-to-state gap. Crude and refining set the weekly move.

The practical takeaway

• Federal tax is the same everywhere: 18.4 cents.
• State tax ranges from under 10 cents to more than 60 cents depending on the state and how you count fees.
• Percentage-based states (Indiana, Michigan, Illinois) see bigger swings because the tax moves with the price.
• California and Pennsylvania are structurally expensive because of tax design, not just tax rate.
• Alaska and Mississippi are structurally cheap on tax, though Alaska’s logistics offset much of the advantage.

For the actual price in your state, use the state price pages — they show the current weekly average and the regional benchmark where a state series does not exist. For how tax fits into the full price stack, read how gas prices are set.