In this article, we will look at the 20 states with the highest gas taxes in the US. If you want to skip our detailed analysis, go directly to the 5 States with the Highest Gas Taxes in the US.
Gas Taxes in the US
Like any other tax, gasoline taxes in the US vary from state to state. Gas taxes have an impact on the lives and finances of most Americans, especially during these tough economic times with high inflation. The US is the top natural gas-producing country in the world in 2024. The states in the US impose gasoline taxes in different ways, including sales taxes, taxes on gasoline retailers, and excise taxes per gallon purchased at the pump. All these different ways of taxes on fuel get passed on to consumers through increased fuel prices.
The US federal government imposes a tax of $0.183 per gallon on gas, $0.243 per gallon on diesel fuel, and a leaking underground storage tank fee of $0.01 per gallon on both gas and diesel. The average price of gasoline in the world is currently around $5 per gallon, while the average price of gasoline in the US is around $3.22 per gallon.
The US states charge gas taxes to function as a user fee to fund the construction and maintenance of the roads. Recently, the increasing presence of electric vehicles and other improvements to vehicle fuel efficiencies have minimized the gas tax’s ability. Many states have considered replacing their gas taxes with vehicle miles traveled (VMT). Similarly, some states are exploring options for environmental or carbon taxes. Instead of user fees funded via gas taxes, these environmental taxes can help improve the environment and discourage the consumption of gasoline that generates emissions.
California charges the highest additional burden on gas prices via carbon taxes. California government agencies are expecting about a $0.12 increase in carbon tax being passed through from the Low Carbon Fuel Standard in 2025, taking the expected carbon tax to $0.47. A similar kind of tax is being considered in Washington through the Climate Commitment Act, while Ecology officials and supporters of the program expect around a $0.27 increase.
In the US, gas prices have steadily dropped since the fall of 2023 due to sluggish demand and increased supply. In the first quarter of 2024, the reduced prices of crude oil and natural gas led to a 12% drop in cash from operations compared to Q1 2023. During Q1 2024, the natural gas price fell 26% year over year and touched the lowest average monthly inflation-adjusted price since at least 1997, as per the US Energy Information Administration (EIA). In its recent ‘Short-Term Energy Outlook,’ EIA wrote:
“We expect U.S. gasoline prices to average around $3.40 per gallon (gal) in 2024 and $3.20/gal in 2025, compared with an average of more than $3.50/gal in 2023.”
Reuters recently reported that analysts are expecting the gas prices to fall below $3 per gallon for the first time in over three years. Analysts are expecting the gas prices to drop as soon as next month, shortly before the US presidential elections.
The oil and gas companies mainly rely on oil production but also have a large portion of gas production as well. Here is one such company that is one of the largest gasoline producers in the US.
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A Leading Oil and Gas Firm
Exxon Mobil Corporation (NYSE:XOM) is one of the leading US oil and gas companies. The company has a market capitalization of $514.56 billion with a forward P/E of 13.85, as of September 28. Exxon Mobil is making aggressive expansion into liquefied natural gas (LNG) projects in Mozambique and the US. These developments are part of the company’s plan to shift towards cleaner energy alternatives, responding to soaring demand for sustainable energy sources.
During the second quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) posted earnings that exceeded the analyst estimates. XOM reported earnings per share of $2.14, beating consensus estimates of $2.01. Exxon Mobil expanded its upstream total net production by 15% during Q2, equivalent to 574,000 oil barrels per day. The company’s product sales increased by 10% which helped in improved revenue. XOM posted revenue of $93.06 billion, surpassing the estimated revenue of $89.68 billion and a year-on-year growth of 12.24%.
As Exxon Mobil Corporation (NYSE:XOM) is making notable developments on the renewable energy front, the company acquired Pioneer Natural Resources in May 2024. This acquisition will help XOM to expand its oil production to 2 million barrels per day by 2027. Exxon Mobil will leverage Pioneer’s expertise to accelerate its net-zero emissions goal from 2050 to 2035. In addition, the company also signed an agreement with Air Liquide to produce carbon-free hydrogen, with 98% CO2 reduction.
Analysts are bullish on XOM with an upside of almost 13% from the current price level of $115.82, as of September 28. Out of 29 analysts, 52% have rated XOM as a buy.
XOM is ranked on our list of the most undervalued blue-chip stocks to buy according to analysts. While we acknowledge the potential of XOM as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Now, let’s take a look at the 20 states with the highest gas taxes in the US.
A customer happily filling up their tank at the Wholesale Club’s gasoline station.
Our Methodology
To compile our list for the 20 states with the highest gas taxes in the US, we obtained data from the Tax Foundation. The states with highest gas taxes in the US are ranked in ascending order of their gas tax rate per gallon, as of 2024.
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20 States with the Highest Gas Taxes in the US
20. Idaho
Gas Tax Rate Per Gallon: $0.33
Idaho has a gas tax rate of $0.33 per gallon. The state excise tax rate is $0.32 and other fees of $0.1 are charged. The state and federal excise tax rate combined is around $0.51 per gallon. Idaho ranks among the 20 states with the highest gas taxes in the US.
19. Georgia
Gas Tax Rate Per Gallon: $0.33
Georgia has a state excise tax rate of $0.32 per gallon and $0.1 per gallon is charged as other fees. Georgia is one of the states with the highest gas taxes in the US.
18. Montana
Gas Tax Rate Per Gallon: $0.34
Montana charges gas taxes around $0.34 per gallon and has an average gas price of $3.29 per gallon, as of September 28. Montana ranks 18th among the states with the highest gas taxes in the US.
17. District of Columbia
Gas Tax Rate Per Gallon: $0.35
The District of Columbia has an average gas price of $3.31 per gallon, as of September 28, and imposes a gas tax of around $0.35 per gallon. The District of Columbia has one of the highest gas taxes.
16. West Virginia
Gas Tax Rate Per Gallon: $0.36
West Virginia has an average gas price of $3.12 per gallon, as of September 28, and charges a gas tax of $0.36 per gallon. West Virginia has an above average state gas tax rate.
15. Utah
Gas Tax Rate Per Gallon: $0.37
Utah ranks 15th among the states with the highest gas taxes in the US. Utah has a gas price of $3.56 per gallon, as of September 28. The state imposes a gas tax rate of $0.37 per gallon.
14. Rhode Island
Gas Tax Rate Per Gallon: $0.38
Rhode Island charges a gas tax of around $0.38 per gallon and ranks among the states with the highest gas taxes in the US. The average gas price per gallon in Rhode Island is around $2.99.
13. Virginia
Gas Tax Rate Per Gallon: $0.39
Virginia imposes a state gas tax rate of $0.39 and the ongoing average gas price in the state is around $3.01, as of September 28. Virginia is one of the states with the highest gas taxes in the US.
12. Ohio
Gas Tax Rate Per Gallon: $0.39
Ohio charges around $0.39 per gallon as gas tax and the state has an average gas price of around $3.20 per gallon, as of September 28. Ohio ranks 12th among the states with the highest gas taxes in the US.
11. Florida
Gas Tax Rate Per Gallon: $0.39
Florida has a gas tax rate of $0.39 per gallon which is higher than the average state gas tax rate of $0.32. The state has an average gas price of $3.17 per gallon and ranks among the states with the highest gas taxes in the US.
10. Oregon
Gas Tax Rate Per Gallon: $0.40
Oregon ranks 10th among the states with the highest gas taxes in the US. Oregon has a gas tax rate of $0.40 per gallon and the state has an ongoing average gas price of $3.66 per gallon, as of September 28.
9. North Carolina
Gas Tax Rate Per Gallon: $0.41
North Carolina has one of the lowest average gas prices in the US, which is around $2.93 per gallon, as of September 28. North Carolina imposes a gas tax rate of $0.41 per gallon.
8. New Jersey
Gas Tax Rate Per Gallon: $0.42
New Jersey is one of the states with the highest gas taxes in the US. The state charges around $0.42 per gallon as gas tax. As of September 28, New Jersey’s average gasoline price was almost $3 per gallon.
7. Maryland
Gas Tax Rate Per Gallon: $0.47
Maryland has an average gas price of $3.24 per gallon, as of September 28. Maryland has a gas tax rate of $0.47 per gallon. Maryland ranks seventh among the states with the highest gas taxes in the US.
6. Michigan
Gas Tax Rate Per Gallon: $0.48
Michigan ranks among the states with the highest gas taxes in the US. The state imposes a gas tax of $0.48 per gallon and the average gas price in the state is around $3.47 per gallon, as of September 28.
5. Indiana
Gas Tax Rate Per Gallon: $0.52
Indiana has a gas tax rate of $0.52 per gallon which is higher than the average state gas tax rate of $0.32. The state has an average gas price of $3.25 per gallon and ranks fifth among the states with the highest gas taxes in the US.
4. Washington
Gas Tax Rate Per Gallon: $0.53
Washington charges a gas tax of around $0.53 per gallon and ranks among the states with the highest gas taxes in the US. The average gas price per gallon in Washington is around $4.06, one of the highest gas prices among the states in the US.
3. Pennsylvania
Gas Tax Rate Per Gallon: $0.59
Pennsylvania ranks third among the states with the highest gas taxes in the US. Pennsylvania has a gas price of $3.33 per gallon, as of September 28. The state imposes a gas tax rate of $0.59 per gallon.
2. Illinois
Gas Tax Rate Per Gallon: $0.67
Illinois charges around $0.67 per gallon as gas tax and the state has an average gas price of around $3.51 per gallon, as of September 28. Illinois ranks second among the states with the highest gas taxes in the US.
1. California
Gas Tax Rate Per Gallon: $0.68
California has the highest gas taxes in the US and charges $0.68 per gallon. California places the largest additional burden on gas prices via carbon taxes. The state has a gas price of $4.70, as of September 28, the highest among all the states in the US.
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Disclosure. None. This article was originally published on Insider Monkey.