Around Maryland, Business

TAXED OUT: Americans to pay $78 billion in gasoline taxes in 2023

BALTIMORE, MD—While Americans race to file their taxes ahead of Tuesday’s deadline, Tax Day is every day for U.S. drivers. Gas prices have been rising over the past several weeks as Americans get back on the road and gear up for summer road trips – but there are some hidden costs buried in what Americans pay for gasoline that are driving up prices even more for many motorists around the country.

Every day, Americans spend $215 million on federal, state, and local taxes on gasoline, with some states having lower taxes, and some having higher taxes. Some states also benefit from higher gasoline prices, with percentage-based sales taxes applied, helping the state to capture additional revenue when motorists are already getting hit with higher gas prices.



“While most Americans blame oil companies or gas stations for the high price of gasoline, few remember the portion Uncle Sam takes at the gas pump: 18.4 cents on every gallon in federal gas tax. But most states take even more than that and may not disclose at the pump how much tax is charged per gallon, causing motorists to target gas stations or oil companies instead of disclosing they are charging an average of 38.7 cents on every gallon,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “Some states pinch motorists even more by having a percentage-based sales tax on gasoline. When gas prices hit a record last year, states saw money rolling in around the clock, in some places more than ever before.”

States with the highest and lowest state gasoline taxes:

Highest:

  • California, 86.55c/gal
  • Illinois, 78.0c/gal
  • Pennsylvania, 77.1c/gal
  • Hawaii, 70.1c/gal
  • New Jersey, 69.1c/gal

Lowest:

  • Alaska, 33.5c/gal
  • Mississippi, 37.2c/gal
  • New Mexico, 37.3c/gal
  • Arizona, 37.4c/gal
  • Missouri, 38.3c/gal

Motorists spend $483 million on federal gasoline taxes every week, or $25 billion every year, while state taxes amount to $145 million per day, totaling $53 billion per year. Increasing gasoline taxes at the state and federal level by just a penny would raise consumer’s tax bill by $2.75 billion per year.

While traveling this summer, drivers should watch out for state lines, where gas prices can significantly increase or decrease over a short distance.


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