Gas taxes in the United States come in two layers. The federal government charges 18.4 cents on every gallon of gasoline and 24.4 cents on every gallon of diesel, and each state adds its own charge on top, ranging from 9.0 cents per gallon in Alaska to 70.9 cents in California as of January 2026.1U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline Almost all of that money is earmarked for transportation: highways, bridges, and public transit at the federal level, and a similar mix at the state level.
What You Pay in Federal Gas Tax
Federal law sets the base rate at 18.3 cents per gallon for gasoline and 24.3 cents per gallon for diesel under 26 U.S.C. § 4081.2Office of the Law Revision Counsel. 26 U.S. Code 4081 – Imposition of Tax Every gallon also carries an extra 0.1 cent for the Leaking Underground Storage Tank Trust Fund, which pays to clean up contamination from aging fuel tanks around the country.3US EPA. Leaking Underground Storage Tank Trust Fund Add those together and the effective federal charge is 18.4 cents for gasoline, 24.4 cents for diesel.
These are flat per-gallon rates, not percentages. When pump prices jump to $4 or $5 a gallon, the federal tax doesn’t budge. That predictability cuts both ways. Federal revenue doesn’t spike when prices rise, and it doesn’t collapse when they fall. The real trouble is inflation: Congress last raised the federal gas tax in 1993, and those 18.4 cents buy roughly half the road work they did three decades ago.4Federal Highway Administration. Ask the Rambler: When Did the Federal Government Begin Collecting the Gas Tax
You never see the federal tax on your receipt. The IRS collects it from refiners and terminal operators at the point where fuel leaves the terminal rack, well before it reaches your local station, so it’s already baked into the wholesale price the retailer pays.
What Your State Adds
Every state layers its own charges onto that federal rate, and the total swing is dramatic. State-level gasoline charges span from 9.0 cents per gallon in Alaska to 70.9 cents in California.1U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline The state total usually bundles several separate charges:
- A state excise tax, a flat per-gallon rate that mirrors the federal design and typically makes up the largest share.
- Sales tax on fuel in some states, which rises and falls with the retail price rather than staying flat.
- Environmental and inspection fees that fund underground tank monitoring, fuel-quality testing, or carbon reduction programs.
The mix matters for what you feel at the pump. In a state with only a flat excise, your total per-gallon tax stays the same no matter what crude oil does. In a state that also applies percentage-based sales tax to gasoline, your tax bill climbs alongside pump prices. A handful of states also let counties or cities impose their own local fuel taxes, which can push totals higher in certain metro areas. Those local option taxes are typically capped by state law and restricted to transportation spending.
Where the Money Goes
Federal fuel tax revenue flows into the Highway Trust Fund, the dedicated account Congress created in 1956 to pay for the interstate system. The fund is split into two pieces. The Highway Account pays for road and bridge construction and maintenance, and the Mass Transit Account supports buses, rail systems, and ferries. Of the tax on each gallon of gasoline, 2.86 cents is routed to the Mass Transit Account, with the rest going to highways.5Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund
States follow a similar pattern. Most earmark fuel tax revenue for transportation, though the specifics range from highway resurfacing to bicycle infrastructure to debt service on transportation bonds. The animating idea is the same at both levels: a user fee, in which the people burning fuel on the roads pay for keeping them up.
Why the System Is Running Short
That user-fee logic has been coming apart for years. Federal rates have been frozen since 1993, construction costs have roughly doubled, and vehicles have grown much more fuel-efficient.4Federal Highway Administration. Ask the Rambler: When Did the Federal Government Begin Collecting the Gas Tax The Highway Trust Fund hasn’t been able to cover its obligations since 2008, and Congress has plugged the gap with transfers from the general fund totaling roughly $275 billion so far.6Congress.gov. Transfers to the Highway Trust Fund Without those transfers, the fund would already be insolvent. Current projections show it hitting zero again around 2028 even with continued help, which leaves Congress facing a choice among raising fuel taxes, finding a replacement revenue source, or continuing to draw on the general treasury.
How Electric Vehicles Fit In
Electric vehicles use the same roads as everyone else and pay zero fuel tax, which sharpens the funding problem as EV numbers grow. At least 41 states now charge EV owners a special annual registration fee to offset some of the lost revenue. The fees run from $50 to roughly $290 depending on the state, with plug-in hybrids typically paying a lower amount between $50 and $150. At least 12 states have tied those fees to inflation indexes so they keep pace with rising road costs.7National Conference of State Legislatures. Special Registration Fees for Electric and Hybrid Vehicles
Flat fees are a blunt tool. A driver who logs 30,000 miles a year in a heavy SUV pays the same surcharge as someone who drives 5,000 miles in a compact car. Several states have run pilots on a more precise approach: road usage charges based on actual miles driven, sometimes called vehicle-miles-traveled fees. Utah and Washington have tested various tracking methods, from odometer readings to GPS-based reporting, though privacy concerns and administrative costs have slowed wider adoption.
Getting the Tax Back for Off-Road Fuel
The logic behind fuel taxes is that you’re paying for the roads you use. If you burn fuel off the road, federal law lets you get the tax back. Under 26 U.S.C. § 6421, businesses that use gasoline for off-highway purposes can claim a refund equal to the full per-gallon tax. The statute defines off-highway business use broadly to cover any fuel consumed in a trade or business other than in a vehicle registered or required to be registered for highway use, and it specifically includes commercial fishing vessels.8Office of the Law Revision Counsel. 26 USC 6421 – Gasoline Used for Certain Nonhighway Purposes, Used by Local Transit Systems, or Sold for Certain Exempt Purposes A separate provision, 26 U.S.C. § 6427, covers diesel and other non-gasoline fuels used in qualifying ways, including fuel used on a farm for farming purposes, fuel consumed by intercity or school buses, and fuel used by certain aircraft museums.9Office of the Law Revision Counsel. 26 USC 6427 – Fuels Not Used for Taxable Purposes
You claim the credit on IRS Form 4136 with your annual return, and the IRS requires supporting records for at least three years after the return is due or filed, whichever is later. At a minimum, keep the name and address of the seller and the dates of each fuel purchase.10Internal Revenue Service. Form 4136 – Credit for Federal Tax Paid on Fuels The cleaner your paper trail separating highway from off-highway fuel, the easier the claim.
A Note on Dyed Diesel
Diesel sold for off-road use is dyed red so inspectors can tell it apart from taxed highway diesel at a glance. Dyed diesel is exempt from the federal excise tax, which makes it noticeably cheaper. It’s legal in farm equipment, construction machinery, generators, and other off-highway applications. It is not legal in the tank of any vehicle driven on public roads.
Under 26 U.S.C. § 6715, the federal penalty for misusing dyed diesel is the greater of $1,000 or $10 for every gallon of dyed fuel found in the vehicle. For repeat offenders, the $1,000 minimum multiplies by the number of prior violations, so a second offense carries a $2,000 floor, a third carries $3,000, and so on.11Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use Many states stack additional penalties on top. Enforcement usually comes at roadside inspections, where an officer draws a fuel sample from the tank; red dye in the sample is treated as evidence of untaxed fuel used on the highway.