Yes, gasoline is taxed at the pump, but you never see the tax as a separate line on your receipt because it is already folded into the posted price. The federal government charges 18.4 cents per gallon on gasoline and 24.4 cents on diesel, and every state adds its own tax on top, ranging from about 9 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 Once you factor in local levies and environmental fees, the average American driver pays roughly 52 cents in taxes on every gallon.2U.S. Energy Information Administration. Frequently Asked Questions – Gasoline and Diesel Fuel Taxes
Why You Never See the Tax on Your Receipt
Unlike sales tax on clothing or electronics, fuel tax is not added at the register. Federal law imposes the excise tax when fuel leaves a refinery or terminal, or when it enters the country for consumption.3Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax Refiners, importers, and terminal operators are the parties who legally owe the money to the IRS. They pass the cost down the supply chain to distributors, to station owners, and finally to you as part of the wholesale price.
Most state fuel taxes work the same way, collected from distributors or wholesalers before the gasoline reaches a retail station. By the time a gallon shows up at your local pump, every layer of tax has already been added to its cost. The big number on the roadside sign is a tax-inclusive price.
How Much the Federal Tax Adds
The federal excise tax on gasoline is 18.4 cents per gallon. That number breaks into two pieces: 18.3 cents in base excise tax and 0.1 cent for the Leaking Underground Storage Tank (LUST) Trust Fund, which pays for cleanup of petroleum contamination from aging fuel tanks.4Office of the Law Revision Counsel. 26 USC 4081 – Imposition of TaxLeaking Underground Storage Tank Trust Fund Diesel is taxed at 24.4 cents per gallon under the same structure.
Because these are flat per-gallon amounts rather than a percentage of the price, the federal tax is the same whether gasoline is $2.50 or $4.50 a gallon. Congress last raised the rate in August 1993, so it has held at 18.4 cents for more than three decades.5Federal Highway Administration. When Did the Federal Government Begin Collecting the Gas Tax Nearly all of the revenue flows into the Highway Trust Fund, which pays for highway construction and mass transit projects.6Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund
What Your State Adds
Every state adds its own fuel tax, and the range is wide. As of January 2026, the average state gasoline tax is about 33.5 cents per gallon. California sits at the top with 70.9 cents, while Alaska is at the bottom near 9 cents.1U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline Combined with the federal rate, the total tax on a gallon runs from under 30 cents in the cheapest states to nearly 90 cents in the most expensive.
Most states use a flat per-gallon excise tax. A smaller group applies a percentage-based sales tax to fuel, so the tax moves with the pump price. Several states layer both approaches together.
Rates That Rise Automatically
Unlike the frozen federal rate, at least 26 states and Washington, D.C., have built automatic adjustments into their fuel taxes so the rate keeps pace with rising costs without new legislation.7National Conference of State Legislatures. Variable Rate Gas Taxes Some tie the rate to the Consumer Price Index, others to a highway construction cost index, and a few to wholesale fuel prices.
Local Fuel Taxes
Some states let counties or cities add their own fuel taxes on top of the state and federal rates. Not every state allows this, but where local option taxes exist they can add more than 10 cents per gallon. If you notice a sudden price jump when crossing a county line, a local fuel tax is often the reason.
Environmental and Regulatory Fees
Beyond the main excise taxes, smaller fees get folded into each gallon. Many states impose underground storage tank inspection fees, fuel-quality testing assessments, and cleanup surcharges. Individual amounts are typically a fraction of a cent to a few cents per gallon.
A handful of states also carry costs tied to carbon-reduction programs. Low carbon fuel standards and cap-and-trade systems don’t appear as a line-item tax, but they raise the cost of producing and distributing gasoline, and that cost gets passed along at the pump. These programs can add several cents per gallon.
When You Can Get Some of It Back
Not all fuel use is subject to the full federal excise tax. If you use gasoline or diesel for certain non-highway purposes, you can claim a credit on your federal tax return using IRS Form 4136.8Internal Revenue Service. Instructions for Form 4136 and Schedule A Qualifying uses include:
- Gasoline or diesel used on a farm for farming purposes, at 18.3 cents per gallon for gasoline or 24.3 cents for diesel.9Internal Revenue Service. Form 4136 – Credit for Federal Tax Paid on Fuels
- Off-highway business use, such as fuel for generators, forklifts, or construction machinery that never operates on public roads.
- Fuel used in commercial fishing vessels.
- Fuel used exclusively by state and local governments, nonprofit educational organizations, and qualified blood collector organizations.
Dyed Diesel
Diesel for off-road use has a simpler path. Diesel that has been indelibly dyed (typically red) at the terminal is sold without the federal excise tax, so buyers pay no fuel tax upfront.10Office of the Law Revision Counsel. 26 USC 4082 – Exemptions for Diesel Fuel and Kerosene Dyed diesel is legal for off-road equipment, farm machinery, and home heating.
Using dyed diesel on public roads is illegal. Federal penalties are the greater of $1,000 or $10 per gallon for each violation, and most states pile on their own fines.11Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use Enforcement typically involves roadside fuel-tank inspections of commercial vehicles.
Electric Vehicles Skip the Pump but Not the Bill
Drivers of fully electric vehicles never buy gasoline, so they don’t pay fuel tax. States have responded by charging a special annual registration fee instead. At least 41 states now impose one, ranging from $50 to roughly $290 per year for standard passenger EVs.12National Conference of State Legislatures. Special Registration Fees for Electric and Hybrid Vehicles Some states charge a smaller supplemental fee for plug-in hybrids. A few have started road-usage charge pilots that bill EV owners by the mile.
What You Actually Pay Per Gallon
Add up federal excise, the LUST fee, state excise, any state sales tax on fuel, local levies, and environmental assessments, and the average American driver pays roughly 52 cents in total taxes per gallon of gasoline.2U.S. Energy Information Administration. Frequently Asked Questions – Gasoline and Diesel Fuel Taxes In low-tax states the total can be under 30 cents. In the highest-tax states it can top 85 cents once environmental program costs are factored in.1U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline All of it is in the number on the sign before you ever squeeze the handle.