Special Fund Revenue
Motor Vehicle Fuel Taxes

The motor vehicle fuel tax, diesel fuel tax, and the use fuel tax are the major sources of funds for maintaining, replacing, and constructing state highway and transportation facilities. Just over one-third of these revenues is apportioned to local jurisdictions for street and highway use.

Gasoline consumption fell by 0.4 percent during 2006-07, due primarily to substantially higher pump prices. Gasoline consumption is expected to increase 2.2 percent in 2007-08 and 1.2 percent in 2008-09.

Because most diesel fuel is consumed by the commercial trucking industry, consumption is affected most significantly by general economic conditions. Diesel fuel consumption grew 3.7 percent in 2006-07, and is expected to rise 4.3 percent in 2007-08 and 4.0 percent in 2008-09.

Motor vehicle fuel tax collections are shown in Figure REV-12.

The motor vehicle fuel tax (gas tax) is collected from distributors when fuel is loaded into ground transportation for transport to retail stations. This fuel is taxed at a rate of 18 cents per gallon. Fuels subject to the gas tax include gasoline, natural gas, and blends of gasoline and alcohol sold for use on public streets and highways.

Distributors pay the diesel fuel tax, which applies to both pure diesel fuel and blends, at the fuel terminal. Diesel fuel for highway use is taxed at a rate of 18 cents per gallon. Dyed diesel fuel, which is destined for off-highway uses such as farm equipment, is not taxed.

The use fuel tax is levied on sales of kerosene, liquefied petroleum gas (LPG), liquid natural gas (LNG), compressed natural gas (CNG), and alcohol fuel (ethanol and methanol containing 15 percent or less gasoline and diesel fuel). These fuels are taxed only when they are dispensed into motor vehicles used on the highways. Current use fuel tax rates are 18 cents per gallon for kerosene, 6 cents per gallon for LPG and LNG, 7 cents per 100 cubic feet for CNG, and 9 cents per gallon for alcohol fuel. Users of LPG, LNG, or CNG may elect to pay a flat rate of tax based on vehicle weight instead of the per-gallon tax.

An excise tax of 2 cents per gallon is levied on aircraft jet fuel sold at the retail level. This tax does not apply to commercial air carriers, aircraft manufacturers and repairers, and the U.S. armed forces.

Local transit systems, school and community college districts, and certain common carriers pay 1 cent per gallon on the fuel they use instead of the tax rates described above.
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CHAPTER HIGHLIGHTS for Revenue Estimates Back to Top

 General Fund Revenue
 Special Fund Revenue
  Motor Vehicle Fees
 image of black pointing arrowMotor Vehicle Fuel Taxes
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Revenue Estimates (pdf * - 540K) -
Provides this entire Revenue Estimates Chapter in pdf format.

SCHEDULE 2 - Summary of State Tax Collections (pdf * - 113K) -
State Tax Collections per capita and per $100 of personal income.

SCHEDULE 3 - Comparative Yield of State Taxes (pdf * - 116K) -
Revenues for Major State Taxes from 1970-71 through 2008-09.

SCHEDULE 8 - Comparative Statement of Revenues (pdf * - 18K) -
Detail of General and special fund revenues by source for the past, current, and budget years within the following categories: (1) major taxes and licenses, (2) minor revenues, and (3) transfers and loans.