States With the Lowest and Highest Gas Taxes

Last Summer, U.S. gas prices exceeded $5 for the first time in history. The causes included the end of the pandemic leading to an increase in demand, and the Russian invasion of Ukraine, resulting in Western embargoes on Russian oil. This includes a total ban by the U.S. last March. The spike in gas prices was one of the main drivers of inflation this past year. (Here’s a list of the countries that have Sanctioned Russia.)

Since then, gas prices have fallen back to an average of $3.60 per gallon, $1.40 below the June 2022 high but still well above any pre-pandemic monthly average going back more than five years. While $3.60 per gallon is the current national average price, what Americans are paying at the pump varies from a little over $3 to nearly $5. That variance is largely the result of different transportation and refining costs and, of course, taxes. (See also: the price of gasoline the year you were born.) 

While the federal government levies a tax of 18.4 cents on every gallon of gas sold in the United States, each state adds on its own excise tax on top of that. State-imposed gas taxes and fees can account for anywhere from 2.3% of the total cost of gas to 16.5%, depending on where you live. 

To determine the highest and lowest gas taxes in every state, 24/7 Wall St. reviewed data on average state gas taxes as of spring 2023 from business tax compliance platform IGEN. State gas taxes do not include the federal gas tax. Data on gas prices by state came from AAA and is current as of April 11, 2023. Data on motor fuel consumption and the number of licensed drivers by state came from the Federal Highway Administration and is for 2021. The gas tax rate ranges at the state level from $0.09 to $0.61 per gallon. 

Generally speaking, states with higher gas taxes have higher relative gas prices overall. California and Pennsylvania, the only two states that levy more than a $0.50 tax per gallon of gas, both rank in the top 10 for overall gas prices. 

At the other end of the list, the relationship is more complicated. Very low gas tax states like Mississippi and Oklahoma also have very low gas prices. But of the seven states that levy less than 20 cents per gallon gas tax, five are in the top 20 for gas prices, including three – Alaska, Hawaii, and Arizona – in the top 10. (More globally, here are the countries with the lowest gas prices in the world at the start of 2023.)

In fact, Alaska and Hawaii have the third and second-highest gas prices among states, respectively. The high gas prices in Hawaii are largely due to the cost of transportation – shipping gas from refineries on the mainland. In Alaska, the high gas prices are partially tied to issues related to the West Coast’s current tight supply of gas due to refineries in California and Washington undergoing maintenance.

It might be expected that higher taxes (and the occasionally resulting higher gas prices overall) would cause Americans to drive less, and on the whole, that appears to be true. Using figures published by the FHA, the average registered driver used 795 gallons of gasoline in 2021. In the eight states where drivers consumed on average 1,100 gallons of gas or more in 2021, gas taxes were less than a quarter per gallon in six. 

Click here to see states with the lowest and highest gas tax.

Click here to see our detailed methodology.

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