State Tax Snapshot: (Most) States Not to Blame for Tax Pain at Gas Pump

With drivers paying out over $4 per gallon at the pump, it would be easy to assume that the states are reaping a windfall in gas tax revenues. In Connecticut, lawmakers reacted to complaints over growing gas tax levies by capping at $3 per gallon the amount of gas sales subject to the state’s petroleum products gross earnings tax.

But Connecticut is one of a minority of states that tax gas as a percentage of purchase price, according to a report by the Institute on Taxation and Economic Policy (ITEP).

Gas taxes are levied at a fixed rate per gallon in 36 states, according to ITEP. The result is that the same number of cents are collected per gallon regardless of price fluctuations. “State gas taxes are a less significant part of families’ household budgets than they have been in eighty years,” ITEP reported.

As the price of gas continues to rise, drivers in the states that tax gas as a percentage of purchase price can expect to pay more taxes. These states, according to ITEP, are:

  • California,
  • Connecticut,
  • Georgia,
  • Hawaii,
  • Illinois,
  • Indiana,
  • Kentucky,
  • Michigan,
  • Nebraska,
  • New York,
  • North Carolina,
  • Vermont,
  • West Virginia

By Steven Roll
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