We've been asked which states adjust their gasoline tax for inflation. Most states (and the federal government) define their gas tax in so many cents per gallon, which can make a difference as time passes and inflation erodes the purchasing power of that tax rate. For example, the federal motor fuels tax today generates one-third fewer dollars in real terms since 1993, when it was last increased. Inflation-adjusting your gasoline tax can prevent this, although it also means you're writing automatic tax increases into law. 3 states adjust their gasoline tax for inflation based on the Consumer Price Index: Florida, Maryland (effective 1/1/13), and New Hampshire (effective 7/1/14). Massachusetts will begin doing so on 1/1/15, assuming it is not repealed by voters in November. Maine formerly adjusted for CPI but repealed that effective 1/1/12. 4 additional states and DC adjust some portion of their gasoline tax for the wholesale price of gasoline: Kentucky, North Carolina, Virginia, West Virginia, and the District of Columbia. 1 additional state adjusts the gasoline tax for state transportation revenue needs: Nebraska. Additionally, some states collect their sales tax in whole or in part on gasoline purchases: Hawaii, Illinois, Indiana, and Michigan. California applies a partial "sales tax" on gasoline on the wholesale price. New York collects local sales taxes on gasoline. Check out current gasoline tax rates here.
