Inflation Adjusted State Gas Taxes

April 27, 2009

We’ve been asked which states index their gas tax to inflation. Two states (Florida and Maine) adjust their state gas tax by the consumer price index, and Nebraska adjusts it by a state funding formula. Three additional states (Kentucky, North Carolina, and West Virginia) link their state gas tax to the wholesale price, which tends to grow with inflation. So, six states.

Other states impose sales tax or other taxes partly or wholly on gasoline purchases, in addition to the gas tax: California: 7.25 percent sales tax; Connecticut: 7.0 percent gross earnings tax; Georgia: 4 percent Prepaid State Tax; Hawaii: 4 percent gross income tax (but exempted for gas sold with ethanol in it, so all gas sold has ethanol in it); Illinois: 6.25 percent sales tax (suspended for the period beginning July 1, 2000, and ending December 31, 2000); Indiana: 7 percent sales tax (suspended for the period between July 1, 2000 and September 15, 2000); Michigan: 6 percent sales tax; New Jersey: gross receipts tax of 4 cents per gallon for on-highway use fuels; New York: 8.0 cents per gallon State sales tax in addition to local sales taxes; Virginia: 2 percent sales tax in areas where mass transit systems exist.

The Alaska state gas tax is currently suspended.

This post updated with additional information after it was initially posted.

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