Get ready to pay a little more at the pump if you live in one of these seven states. On July 1, 2024, California, Colorado, Illinois, Indiana, Missouri, Nebraska, and Virginia will increase their state gas taxes.
The States Raising Gas Taxes & by How Much
Here’s a breakdown of the gas tax rates in the seven states raising them on July 1:
- California: 69.8 cents per gallon — the highest of all states
- Illinois: 67.1 cents per gallon
- Indiana: 56.1 cents per gallon
- Virginia: 40.4 cents per gallon
- Nebraska: 30.5 cents per gallon
- Colorado: 27.9 cents per gallon
- Missouri: 27.5 cents per gallon
These rates include the increases taking effect on July 1. California’s gas tax will remain the highest in the nation, while Illinois will have the second-highest rate.
How Much More Will Drivers Pay?
The actual cost to drivers depends on the specific state increase, your vehicle’s fuel efficiency, and how many miles you drive.
Here’s an example:
For a car that gets 25 mpg and drives 12,000 miles per year, a 1 cent per gallon gas tax increase equals an extra $4.80 per year. So if you live in Illinois where the gas tax is 67.1 cents per gallon, that driver would pay about $322 per year in state gas taxes.
Gas taxes are just one component of the price you pay at the pump. Crude oil prices, refining costs, distribution expenses, and station markup also factor in. But when taxes go up, you can expect to see that passed along to consumers fairly quickly.
Where Does Gas Tax Revenue Go?
Most state gas tax revenue is used to fund transportation infrastructure like roads, highways and bridges. But some states allocate portions to other programs too. For example:
- In California, the gas tax helps fund highway and road maintenance, bridge repairs, and public transit improvements.
- Illinois splits gas tax revenue between the state and local governments for road projects.
- Colorado directs some gas tax revenue to environmental programs.
So while no one likes paying more taxes, the idea is that the gas tax functions as a user fee – drivers pay it and then benefit from better roads and transportation infrastructure.
Why Gas Taxes are Going Up
Many states tie their gas tax rates to inflation or adjust them annually based on a formula. For example:
- California’s gas tax automatically increases each July based on the change in the Consumer Price Index.(ref)
- Illinois’ gas tax rises every July 1 under a 2019 law that indexed annual increases due to inflation.(ref)
- Indiana’s gas tax is adjusted each year based on a formula that considers inflation and the state’s personal income growth.(ref)
So the upcoming July 1 increases were set in motion by previous legislation in most of these states. But that doesn’t make them any less painful for drivers.
The Road Ahead for Gas Taxes
Rising gas taxes are an unwelcome reality for many drivers. While the increases taking effect July 1 in California, Colorado, Illinois, Indiana, Missouri, Nebraska, and Virginia vary in size, they’ll all take a bite out of your budget.
Still, for now, they remain a fact of life for drivers in most states. So as you hit the road this summer, be prepared to pay a little more at the pump if you’re filling up in one of these states.
And remember, even if you’re not facing a state gas tax increase, prices tend to rise in summer anyway due to higher demand. So plan accordingly and drive safely!
Read Next:
Martha A. Lavallie
Martha is a journalist with close to a decade of experience in uncovering and reporting on the most compelling stories of our time. Passionate about staying ahead of the curve, she specializes in shedding light on trending topics and captivating global narratives. Her insightful articles have garnered acclaim, making her a trusted voice in today's dynamic media landscape.
