The price drivers pay on the pump – a mean of $3.45 in June – features a federal tax of 18.4 cents per gallon and widely various state taxes.
Seven locations will increase state taxes at the peak of the summer driving season. The following list shows the whole state taxes for these locations, effective July 1:
- California: 69.8 cents per gallon – the very best price of any state.
- Colorado: 27.9 cents per gallon.
- Illinois: 67.1 cents per gallon.
- Indiana: 56.1 cents per gallon.
- Missouri: 27.5 cents per gallon.
- Nebraska: 30.5 cents per gallon.
- Virginia: 40.4 cents per gallon.
How these states are increasing their taxes
In CaliforniaThe state excise tax on gasoline will rise from 57.9 cents per gallon to 59.6 cents per gallon, in response to the California Department of Revenue. When other state taxes and costs are taken under consideration, the state tax on a gallon of fuel in California will rise from about 68 cents to about 70 cents.
In ColoradoThe state's road toll will rise from 3 cents per gallon to 4 cents per gallon, in response to the Colorado Department of Revenue. Additionally, an environmental fee will rise from 0.6 cents per gallon to about 1.3 cents per gallon. These fees are along with a 22-cent gasoline tax. Overall, the state's gasoline tax will rise from about 26 cents per gallon to about 28 cents per gallon.
In Illinoisthe state's gasoline tax will rise from 45.4 cents per gallon to 47 cents per gallon, in response to the Illinois Department of Revenue. Overall, the state's tax on gasoline will rise from 66.5 cents per gallon to 67.1 cents per gallon – the second highest within the country
In IndianaThe gas tax will increase from 34 cents to 35 cents per gallon, in response to the Indiana Department of Revenue. In addition to this excise tax and a 1-cent oil inspection fee, the state imposes a gasoline tax. This tax rate is adjusted monthly. In July, the excise tax rate might be 20.1 cents per gallon. Overall, state taxes for Indiana motorists might be 56.1 cents per gallon.
In MissouriThe fuel tax will rise from 24.5 cents per gallon to 27 cents per gallon, in response to the Missouri Department of Revenue. Combined with two other taxes on a gallon of gasoline that total about half a cent, the state tax will total 27.5 cents per gallon.
In NebraskaThe fuel tax will rise by half a cent to 29.6 cents per gallon, in response to the Nebraska Department of Revenue. Combined with an environmental fee, motorists within the state pays 30.5 cents per gallon in state taxes.
In VirginiaThe fuel tax will increase from 29.8 cents per gallon to 30.8 cents per gallon, in response to the Virginia Department of Motor Vehicles. In addition, the state sales tax on gasoline will increase from 8.7 cents per gallon to 9 cents. In total, motorists pays 40.4 cents per gallon in state taxes.
How gas prices are set
In addition to the federal gasoline tax of 18.4 cents per gallon, most states impose quite a few other taxes and costs on a gallon of gasoline, including a mixture of excise taxes (on goods, services and activities), sales taxes, environmental taxes and inspection fees.
Those costs add as much as a mean of 32.6 cents per gallon in state taxes, in response to a NerdWallet evaluation of U.S. Energy Information Administration data. Combined with the federal tax, that adds a mean of 51 cents to the value per gallon of gasoline.
However, state tax rates vary widely. The highest rates are California (69.8 cents per gallon) and Illinois (67.1 cents), followed by Pennsylvania (58.7 cents). Alaska has by far the bottom state taxes (9 cents per gallon), followed by Mississippi (18.4 cents) and Hawaii (18.5 cents).
In many cases, gas taxes are adjusted annually based on the Consumer Price Indexa proxy for inflation calculated by the US Bureau of Labor Statistics. This signifies that taxes increase with the annual inflation rateSometimes states introduce latest or higher fees step by step, increasing them annually.
What happens with these tax revenues is that states often use them to finance infrastructure improvements and environmental initiatives.
The article Attention drivers: Seven states are increasing gasoline taxes on July 1 originally appeared on NerdWallet.
image credit : www.mercurynews.com