The excise tax on fuel is a per-gallon charge the federal government and every state add to gasoline, diesel, and other motor fuels to pay for roads, bridges, and public transit. The federal share is 18.4 cents on a gallon of gasoline and 24.4 cents on a gallon of diesel. Your state piles its own tax on top, and the national state average sits around 33.3 cents per gallon. You never see the tax on your receipt because it’s collected far upstream and baked into the pump price by the time you fill up.
Federal Rates by Fuel Type
The federal tax has two pieces. The main excise tax is 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel and kerosene. Every gallon of motor fuel also carries an additional 0.1 cent for the Leaking Underground Storage Tank (LUST) Trust Fund, which pays for cleaning up contamination at aging fuel storage sites.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax Add those together and you get the familiar 18.4 cents on gasoline and 24.4 cents on diesel.2U.S. Energy Information Administration. How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel The higher diesel rate reflects the heavier wear commercial trucks and buses put on road surfaces.
These rates have not moved since 1993. More than three decades of inflation have eroded roughly 71 percent of the tax’s purchasing power, which is why the Highway Trust Fund now leans heavily on transfers from the general Treasury.
Other fuels are taxed too, at their own rates:
- Aviation gasoline: 19.3 cents per gallon
- Jet fuel for commercial airlines registered with the IRS: 4.3 cents per gallon
- Jet fuel for private and general aviation: 21.8 cents per gallon
- Propane (liquefied petroleum gas): 18.3 cents per energy-equivalent gallon of gasoline, defined as 5.75 pounds of LPG
- Compressed natural gas: 18.3 cents per energy-equivalent gallon of gasoline, defined as 5.66 pounds of CNG
- Liquefied natural gas: 24.3 cents per energy-equivalent gallon of diesel, defined as 6.06 pounds of LNG
- Liquid fuels derived from coal or biomass: 24.3 cents per gallon
The 0.1-cent LUST surcharge applies on top of each of these rates.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax3Office of the Law Revision Counsel. 26 USC 4041 – Imposition of Tax Aviation fuel revenue flows into a separate Airport and Airway Trust Fund rather than the Highway Trust Fund.
State Taxes on Top of the Federal Rate
Every state charges its own fuel tax, and the spread is wide. As of January 2026, state gasoline taxes and fees range from 9.0 cents per gallon in Alaska to 70.9 cents per gallon in California, with a national average of about 33.3 cents.4U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline Add the federal 18.4 cents and the total tax on a gallon of regular gasoline runs from about 27 cents to nearly 90 cents depending on where you’re standing.
Many states use variable-rate structures that adjust automatically based on the wholesale price of fuel, the Consumer Price Index, or both. Some also tack on separate environmental or underground storage tank fees. Crossing a state line can noticeably change what you pay to fill up.
Who Actually Pays It
You don’t file anything with the IRS to pay fuel tax, and it won’t appear as a line item on your gas station receipt. The tax is collected at the “terminal rack,” the point where fuel is loaded from a storage terminal into the tanker trucks that deliver it to gas stations. Whoever owns the fuel in the terminal at that moment (the “position holder” in the statute) is legally on the hook.5eCFR. 26 CFR 48.4081-2 – Taxable Fuel; Tax on Removal at a Terminal Rack That cost gets built into the wholesale price, and each link in the supply chain passes it along until it reaches the pump.
Where the Money Goes
Nearly all federal fuel tax revenue goes into the Highway Trust Fund, which Congress created in 1956 to build the Interstate Highway System. The fund has two accounts: the Highway Account pays for road and bridge work, and the Mass Transit Account pays for buses, subways, rail, and ferries. By statute, this money is restricted to transportation and generally cannot be spent on unrelated programs.6Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund Most states earmark their fuel tax collections the same way.
The fund has been spending more than it collects for years. Transfers from the general Treasury have totaled roughly $275 billion since 2008, including $118 billion authorized by the Infrastructure Investment and Jobs Act in 2021. Current spending authority for both accounts runs through September 30, 2026, and projections show insolvency as early as 2028 without structural change.6Office of the Law Revision Counsel. 26 USC 9503 – Highway Trust Fund
Getting the Tax Back for Off-Highway Use
The tax exists to fund public roads. If you burn fuel for something unrelated to public roads, you can generally get the tax back. The IRS calls these “nontaxable uses,” and they include:
- Fuel used on a farm for farming purposes
- Off-highway business use, meaning equipment, machines, or vehicles operated on private property or a job site rather than public roads
- Fuel used in commercial fishing boats
- Fuel used in intercity, local, and school buses
- Fuel used exclusively by state or local governments, or by nonprofit educational organizations
- Fuel exported out of the country
The credit does not cover personal off-road recreation like snowmobiles and ATVs, and it does not cover commuting.7Internal Revenue Service. Instructions for Form 4136 and Schedule A (2025)
How to Claim It
You have two options. Form 4136, filed with your income tax return, gives you a dollar-for-dollar credit against your tax liability for each qualifying gallon. You track how many gallons went to each nontaxable use and multiply by the per-gallon credit rate on the form. Undyed diesel used in farming, for example, credits back at 24.3 cents per gallon, essentially refunding the full excise tax.7Internal Revenue Service. Instructions for Form 4136 and Schedule A (2025) Only the person or business that actually burned the fuel can claim it.
If you don’t want to wait until tax season, Form 8849 lets you request a direct refund. Schedule 1 covers end-user nontaxable uses, and Schedule 2 covers registered vendors who sell untaxed fuel to qualifying buyers like government agencies.8Internal Revenue Service. About Form 8849, Claim for Refund of Excise Taxes Either route, you need solid records: purchase receipts with dates, quantities, supplier information, and a clear description of how each gallon was used.9Internal Revenue Service. Fuel Tax Credit
Dyed Fuel: Legal Off-Road, Illegal On-Road
Tax-exempt diesel and kerosene are dyed red before leaving the terminal so enforcement officers can spot fuel that never had highway tax applied to it. Farmers and off-road operators can legally buy and burn dyed fuel. Running it in a vehicle that drives on public roads is a different matter.
The federal penalty for putting dyed fuel in a highway vehicle is the greater of $1,000 or $10 per gallon of the improperly used fuel. That’s per violation. A second offense doubles the base to $2,000; a third triples it to $3,000, and the escalation continues from there. After two prior penalties, most administrative appeal rights are gone. Officers, employees, and agents who knowingly participated can be held jointly liable with the business.10Office of the Law Revision Counsel. 26 USC 6715 – Dyed Fuel Sold for Use or Used in Taxable Use State agencies run random roadside inspections, and the dye is detectable in trace amounts even after dilution.
Electric Vehicles and What Comes Next
Electric vehicles use the roads but buy no taxable fuel, which pulls at the seam of the whole system. At least 41 states now charge special annual registration fees for EVs to make up part of the lost revenue, ranging from $50 to $290 depending on the state, with some states charging reduced fees for plug-in hybrids. These fees partially offset the gap rather than closing it. Some policymakers have proposed a vehicle-miles-traveled fee that would charge drivers by distance rather than by the gallon, and several states have run pilots, but no state has fully replaced its fuel tax. At the federal level, a rate frozen since 1993 combined with a slowly electrifying fleet means the funding gap keeps widening until Congress acts.