Yes, gasoline is taxed in the United States, and it’s taxed at every level of government. The federal government charges 18.4 cents per gallon, every state adds its own tax on top, and many counties and cities layer on further surcharges. As of January 2026, drivers in an average state pay roughly 52 cents per gallon in combined federal, state, and local fuel taxes. That figure runs from under 30 cents in the cheapest states to nearly 90 cents in the most expensive. You never see any of it on a receipt because the tax is baked into the price on the pump sign.
The Federal Gas Tax
Under 26 U.S.C. § 4081, the federal tax attaches to motor fuel when it leaves a refinery or terminal, so the cost is already inside the wholesale price by the time a station receives a shipment.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax For regular gasoline, the base excise rate is 18.3 cents per gallon. A separate 0.1-cent charge funds the Leaking Underground Storage Tank (LUST) Trust Fund, which the EPA uses to clean up contamination from failed fuel tanks.2US EPA. Leaking Underground Storage Tank Trust Fund Together, that’s 18.4 cents per gallon.
Diesel is taxed at a higher rate: 24.3 cents per gallon plus the same 0.1-cent LUST surcharge, for a combined 24.4 cents.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
These rates don’t move with oil prices. The federal gas tax has been frozen at the same level since 1993 and is not indexed to inflation.
State and Local Fuel Taxes
Every state stacks its own fuel taxes on top of the federal layer. Some use a flat per-gallon excise, others apply a percentage-based sales tax to the price of fuel, and many combine the two. As of early 2026, state-level gas taxes (including related fees collected at the pump) run from single digits per gallon in the cheapest states to over 60 cents in the most expensive. The national average is around 33 cents per gallon in state taxes alone.
Counties and municipalities can add their own surcharges in many states, typically one to twelve cents per gallon depending on what state law authorizes. Two stations a few miles apart, on opposite sides of a county line, can post noticeably different prices on the same fuel for that reason alone.
A growing number of states have moved off flat rates. California, Florida, Illinois, Maryland, North Carolina, Rhode Island, and Virginia tie their fuel tax rates to the Consumer Price Index or a similar metric, so the rate adjusts automatically each year without new legislation. Drivers in those states can see their fuel taxes creep up annually.
Why the Tax Never Appears on Your Receipt
Unlike sales tax at a store register, fuel taxes are invisible at the point of sale. You pay one number at the pump, and nothing on the receipt breaks it apart. That’s by design. Collecting the tax upstream, at the refinery or terminal, means the government deals with a handful of large distributors rather than hundreds of thousands of retail stations.
The share of pump price that is tax varies with fuel prices. When gasoline costs $3.00 a gallon and the combined tax is 52 cents, taxes make up roughly 17 percent of what you spend. In a state where the combined federal and state burden approaches 80 or 90 cents, a quarter or more of the retail price is pure tax. In low-tax states, the share is closer to 10 percent.
Where Fuel Tax Revenue Goes
Federal fuel tax revenue flows into the Highway Trust Fund, a dedicated account under 26 U.S.C. § 9503 that finances road and bridge construction, highway maintenance, and public transit projects.3Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund The fund runs on a user-pays principle: drive more, burn more fuel, pay more toward the roads. A portion also supports the Mass Transit Account for public transportation projects.4Federal Highway Administration. Funding Federal-aid Highways – The Highway Trust Fund
States generally follow a similar model, sending fuel tax collections to highway maintenance, bridge repair, and local road projects, with some carve-outs for transit or environmental programs. The LUST fee funds the separate EPA cleanup trust for leaking underground fuel tanks.2US EPA. Leaking Underground Storage Tank Trust Fund
When You Can Get the Federal Tax Back
The federal tax exists to fund roads, so fuel burned for purposes unrelated to highways can qualify for a refund or credit. Under 26 U.S.C. § 6427, the IRS reimburses the tax on fuel used for nontaxable purposes, including farming, off-highway business use, commercial fishing boats, school buses, and fuel exported from the country.5Office of the Law Revision Counsel. 26 USC 6427 – Fuels Not Used for Taxable Purposes
You claim the refund on IRS Form 4136, filed with your income tax return. The form lists each qualifying use and the per-gallon credit rate. Undyed diesel used on a farm, for example, qualifies at the full 24.3-cent rate.6Internal Revenue Service. 2025 Instructions for Form 4136 Fuel burned in off-highway business equipment, like a generator or construction machinery not registered for road use, also qualifies. Government entities, nonprofit educational organizations, and qualified blood collector organizations receive full exemptions. If you burn fuel off-road for business and have never filed Form 4136, you may be leaving real money on the table.
Dyed Diesel Is Untaxed, and Illegal on the Highway
Diesel sold for off-road or exempt uses is dyed red to distinguish it from taxable highway fuel. Under 26 U.S.C. § 4082, indelibly dyed diesel destined for a nontaxable use is exempt from the federal excise tax entirely.7Office of the Law Revision Counsel. 26 USC 4082 – Exemptions for Diesel Fuel and Kerosene Common uses include farm equipment, construction machinery, home heating, and railroad locomotives. Every pump dispensing dyed fuel must display a notice stating that the fuel is for nontaxable use only and that penalties apply for taxable use.8eCFR. 26 CFR 48.4082-2 – Diesel Fuel and Kerosene; Notice Required for Dyed Fuel
Putting red-dyed diesel in a truck or any other vehicle registered for highway use is illegal. The federal penalty is $1,000 or $10 per gallon, whichever is greater, plus payment of the tax that should have been collected, and it escalates for repeat offenders.9Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use Refusing to allow an IRS inspection of your fuel tanks carries a separate $1,000 fine per refusal.10Internal Revenue Service. Publication 4941 – Penalty Guidance for Dyed Diesel Fuel States may pile on their own fines. The IRS runs random roadside inspections, and the dye is easy to detect.
Electric Vehicles and What Comes Next
Electric vehicles use the roads without buying gasoline, and as adoption grows the gap in road funding widens. Most states have responded with supplemental annual registration fees on electric and hybrid vehicles, typically $50 to $290 depending on the state and vehicle type. At least a dozen states have structured these fees to increase automatically over time.
A few states are testing something more fundamental: mileage-based road usage charges that would replace the per-gallon tax. Oregon, Utah, and Washington have run pilot programs where drivers pay a per-mile fee as an alternative to the gas tax. California has studied the concept and confirmed it is technically feasible, though it has not moved beyond the pilot stage. As fuel consumption becomes a weaker proxy for road use, charging by the mile is the leading proposal for keeping the user-pays logic intact. Privacy concerns and administrative complexity remain the main obstacles.