Gasoline Taxes – Who Gets the Cash?

gas tax

If you’ve ever driven across the state lines to buy cheaper gas, you know about gasoline taxes. But did you know how much of your gasoline price goes to tax, and to what government entity it is paid? Here’s a breakdown.

Federal Tax. Every gallon of gasoline that you purchase includes a $0.183 excise tax that goes to the Federal government. If you have a Diesel engine, your pay $0.243 per gallon. This tax helps pay for road infrastructure projects like roads and bridges. There is also a $0.01 Federal tax for gasoline and Diesel that goes to the poorly named “LUST” fund, which stands for “Leaking Underground Storage Tank”. These taxes have not been raised since 1993, back when the average cost of gasoline was only $1.06!

State Tax. The average state tax varies, but is generally about 30 cents per gallon. North Carolina’s pump tax is currently $0.40.5 per gallon, with an additional .0025 inspection tax. North Carolina is among the states that has the same amount levied on gasoline and Diesel. The North Carolina Department of Revenue determines the tax rate on fuel, using a formula set by state law. Sometimes the tax rate changes mid year.

Revenue from North Carolina gasoline taxes is put into two separate funds. The “Highway Fund” is dedicated to maintenance and operation. In 2020, 71% of monies received went into this fund. The remainder goes to the “Highway Trust Fund”, to capitalize future highway projects. According to the NCDOT, the average driver pays gasoline tax that would pay for patching one pothole each year.

North Carolina charges more state tax on a gallon of gasoline than South Carolina or Virginia, so our state has more revenue that they can potentially use to keep our roads in good shape structurally and aesthetically. Our state gasoline tax has actually decreased slightly from previous years.

How to Pay Less Tax. The best way to pay less gasoline tax is to use less fuel! Carpooling and running errands strategically will help you drive less. Another way to reduce your fuel consumption is to make sure that your vehicle is running efficiently. And of course, that’s where Norris Automotive comes in! We help make sure that each part of your engine is it the best condition possible. That’s good for your vehicle, for the environment, and also – for your wallet!


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