There is a tax on gas at both the federal and state level in the United States. The federal government charges a flat 18.4 cents on every gallon of gasoline, and every state adds its own excise tax on top, ranging from under 9 cents to roughly 71 cents per gallon depending on where you fill up. Those taxes are already built into the price on the pump, so you never see them broken out on your receipt.
The Federal Gas Tax
Under 26 U.S.C. ยง 4081, the federal excise tax is 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax It’s a fixed amount per gallon, not a percentage of the price, so you pay the same 18.4 cents whether gas costs two dollars or five.
The rate hasn’t changed since 1993, when Congress set it as part of the Omnibus Budget Reconciliation Act.2U.S. Department of Transportation. Ask the Rambler: When Did the Federal Government Begin Collecting the Gas Tax? The tax is collected when fuel leaves a refinery or storage terminal, well before it reaches a retail station, and distributors pass the cost through in the posted price.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
What Your State Adds
Every state levies its own excise tax on motor fuel, and the spread is wide. As of 2025, combined state and local rates run from under 9 cents per gallon in the lowest-tax states to about 71 cents in the highest. Most states use a fixed per-gallon rate, but some tie theirs to the wholesale price of fuel or the consumer price index so it adjusts automatically each year.
Local governments stack another layer on top in many areas. Counties and municipalities may add their own fuel surcharges, often one to five cents per gallon, to pay for regional road projects or transit. Because federal, state, and local taxes all pile together, the total tax on a gallon can differ by more than 40 cents depending on where you buy it. About ten states also apply their general sales tax to gasoline in addition to excise taxes, which means the tax on a gallon rises and falls with the market price of fuel.
Smaller Fees Built Into the Price
A handful of smaller mandatory fees are also folded into the pump price. The most common is the Leaking Underground Storage Tank (LUST) fee, a 0.1-cent-per-gallon federal charge on gasoline, diesel, and aviation fuels that funds cleanup of petroleum leaks from underground tanks.3US EPA. Leaking Underground Storage Tank Trust Fund The fee was most recently extended through October 1, 2026, under the Infrastructure Investment and Jobs Act of 2021.4EPA. Leaking Underground Storage Tank Trust Fund Prevention Cooperative Agreement Guidelines
Many states also charge petroleum inspection fees, small per-gallon assessments that pay for fuel-quality testing and weights-and-measures verification. These are typically fractions of a cent per gallon, vary widely by state, and some states don’t charge them at all. Individually they barely register, but they’re mandatory for every distributor and get passed through in the posted price.
Where the Tax Money Goes
Federal fuel tax revenue flows into the Highway Trust Fund. Of the 18.4 cents collected per gallon of gasoline, 15.44 cents goes to the Highway Account for building and maintaining highways and bridges, 2.86 cents goes to the Mass Transit Account for buses, rail, and subways, and the last 0.1 cent goes to the LUST Trust Fund.5Federal Highway Administration. Highway Trust Fund and Taxes – FAST Act Fact Sheets
State fuel tax revenue usually follows a similar pattern. Most states require gas tax receipts to be deposited into dedicated transportation funds rather than the general treasury, legally earmarking the money for road construction, bridge repair, and transit.
When You Can Get the Federal Tax Back
If you use gasoline or diesel in equipment that never touches a public road, you may be able to recover the federal excise tax by claiming a fuel tax credit on IRS Form 4136. Qualifying uses include fuel burned on a farm for farming purposes, fuel used in a boat for commercial fishing, and fuel used in off-highway business equipment such as generators, construction machinery, and forklifts.6Internal Revenue Service. Instructions for Form 4136 and Schedule A (2025) The credit doesn’t cover personal off-road use like snowmobiles, lawn mowers, or recreational vehicles.7IRS. 2025 Instructions for Form 4136 and Schedule A – Credit for Federal Tax Paid on Fuels
You file Form 4136 with your annual income tax return and record fuel costs from your receipts along with a description of the equipment that used the fuel. The IRS requires you to keep those records for at least three years from the date the return is due or filed, whichever is later.7IRS. 2025 Instructions for Form 4136 and Schedule A – Credit for Federal Tax Paid on Fuels If you run multiple businesses that each use qualifying fuel, you file a separate Schedule A for each one.
One related rule catches drivers off guard: diesel dyed red is sold untaxed for off-road and heating use, and running it in a vehicle driven on public roads is a federal offense. The penalty is the greater of $1,000 or $10 for every gallon involved, and it can be imposed on the seller, the user, or both.8Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use Many states pile their own penalties on top.
What Could Change
Because the federal rate has been frozen since 1993 while construction costs and vehicle fuel efficiency have both risen, the Highway Trust Fund consistently spends more than it takes in. From 2008 through 2025, outlays exceeded revenues by $238 billion, and more than $275 billion in transfers from the general treasury were needed to keep payments to states on schedule.9Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036
The Congressional Budget Office projects the fund’s combined balance will be exhausted by 2028 if Congress does not act. At that point, spending would need to drop roughly 40 percent below projected levels to match the roughly $49 billion per year that highway-related taxes bring in.9Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036 All but 4.3 cents of the federal motor fuel tax is currently scheduled to expire on September 30, 2028, along with federal taxes on tires.10Congressional Budget Office. Highway Trust Fund Accounts If Congress doesn’t extend or replace those taxes, the federal gas tax would drop from 18.4 cents to 4.3 cents per gallon.
States are already trying to fill part of the gap another way. As drivers switch to electric vehicles that use no gasoline, roughly 40 states now charge EV owners a supplemental annual registration fee, generally between $50 and $260 per year depending on the state and vehicle type, with some also charging a reduced fee for plug-in hybrids. A smaller group, including Oregon, Utah, Virginia, and Hawaii, run voluntary road usage charge programs that let EV owners pay a per-mile fee instead of the flat surcharge. Hawaii’s program is scheduled to become mandatory for EV owners after 2028.11National Conference of State Legislatures. States Look to Mileage Based Fees to Replace Gas Tax Revenue For now, the federal and state excise taxes on each gallon remain the primary way American roads get paid for.