Federal excise tax is imposed on certain goods, services, and activities. The excise tax is an indirect tax levied on listed items. The excise tax that is made by Federal, State, and Local Governments is not uniform throughout the United States. The Excise Tax on goods such as gasoline, diesel fuel, alcohol, and tobacco are taxed by multiple Governments simultaneously. How much is the Federal Excise Tax on Gasoline? What is the difference between gasoline and diesel fuel taxes? Read on to learn the answers to these questions.
To learn about Federal Excise Tax on Fuels in detail refer to our blog on what is a fuel excise tax
Did you know that the Federal taxes raised $86.8 billion in fiscal year 2020? Before getting into details on how much the federal gasoline tax is, let us first understand the federal excise tax in greater detail. Who is the Excise tax levied upon? Taxpayers include importers, retailers, manufacturers, and consumers. The amount of tax varies on the specific tax that applies to the taxpayers. Excise tax may be imposed in the following cases -
Entry into the United States, or sale or use after importation
Sale or use by the retailer
Use by the consumer
Sale or use by the manufacturer
Given the above details on Federal Excise Tax, now comes the question of how much is the Federal Excise Tax on Gasoline? The Federal Excise Tax for Gasoline has been stable at 18.4 cents per gallon for Gasoline since 1993. It is interesting to note that most states exempt Gasoline from general sales taxes. The total state and federal taxes are relatively low compared to other industrialized countries, this is without considering the sales tax rebate.
The Federal taxes include taxes of 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel. Additionally, a Leaking Underground Storage fee of 0.1 cents per gallon on both fuels. State taxes include rates of general application, including but not limited to, excise taxes, environmental taxes, special taxes, and inspection fees. State taxes on the other hand do not include county and local taxes.
A 2024 report by the U.S Energy Information Administration (eia), the Average state tax rates for retail gasoline and diesel fuel flat since January 2024.
On highway diesel fuel prices have been higher than regular-grade gasoline prices, on a dollar-per-gallon basis. This has been the trend since September 2024. The main reasons for this difference are the demand for diesel fuel has been higher than other distillate fuels and the transition to less polluting diesel has increased production and distribution costs.
There is also a difference in the tax on Gasoline and Diesel fuel, the former set at 18.3 cents and the latter at 24.3 cents. The U.S Energy Information Administration provides complete details on fuel taxes state-by-state. The information includes federal and state-level taxes on motor gasoline, diesel fuel, aviation gasoline, and jet fuel.
The EIA also publishes U.S. retail gasoline prices, including taxes for 10 cities, 9 states, and all Petroleum Administration for Defence Districts. Historical gasoline price data is also available with the EIA.
Wrapping up
In conclusion, federal excise taxes on gasoline and diesel fuel are essential for funding infrastructure and transportation projects. While the tax rates differ, they reflect factors like demand, production costs, and environmental regulations. Understanding these taxes helps businesses make informed decisions.
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