Fuel for Thought: Navigating Gasoline Taxes

The gasoline tax that everybody in the United States feels. Now it was interesting, I was driving across the country last week, the Northeast to the Midwest, and I stopped and I saw in Pennsylvania that there was this gas tax sign on next to the gas pump and it said 24 cents federal for diesel, 17 cents federal for gas, and then it had the actual state tax and I didn't really realize that the feds taxed gas along with the state taxing gas. So there's this tax on gasoline, which I knew existed, I just didn't know the level that it existed. So the first state to actually bring gasoline tax was Oregon. And you can see here all the different levels of gas taxes and how much they are. Now this is in 2022, 2022, all the ones in red are the federal tax amounts, the left is gasoline, the right is diesel. And you can see that they stay pretty even, but each state has their own level. The top state in 2022 was Pennsylvania, but California overtook it in 2023 with 77 cents a gallon tax. So you're getting 17 cents on a gas from the feds and then you're getting 77 cents gas tax from the state of California, almost a dollar a gallon. I mean, when you think about that, gas prices averaging $4, essentially they would go down a dollar if we weren't being taxed on gas. So the first place to actually tax gas in the United States was Oregon in 1919 and they taxed at one cent per gallon. They said the revenue was going to be used to build roads and it was really including the Pacific Highway and the Columbia River Highway that really helped to build up the infrastructure on the West Coast. But interestingly enough, within 10 years from 1919 to 1929, every single state in the union had a gas tax. So within a decade of one state doing it, everybody jumped on. Now the feds as well jumped on the bandwagon and introduced their state tax. So there are some states, however, that when the gas prices go really high, like they did last year at the end of 2022, they'll do a gas tax holiday or they'll give you four weeks of no gas tax. So the state of Florida did it in October. And you can see on this map, this is a 2023 map. The darkest states have the highest tax per gallon for gasoline. So California is number one, Pennsylvania is number two, Illinois is number three. Those places really hit you hard. So that's pretty interesting to think when you go, why would this state tax more than the other states? I can see California needing more infrastructure, 40 million, 39 million people live there. Pennsylvania, I mean, there are people there, but fundamentally, it's just curious as to what these funds really go to. And when I started to research it a little bit more, all I found is they just went to road building. That was basically the overall reason for any state to have the gas tax was because they wanted to build more roads. And then my mind got thinking, like, what is my actual, when I register my vehicle in the state and I pay anywhere from $100 to $400 to register the vehicle, what does that go to? So there's a lot of tax to no end when it comes to this. Now, some states even have gas tax, and then on top of that, they hit you with sales tax, which is really crazy to me. So not only are you getting hit with, say, California, 77 cents, then you're getting hit with another sales tax that can be eight cents. So you're almost literally being taxed a dollar to put one gallon of gas into your car. So that's a bit of an interesting layout when it comes to how gas taxes work and where they came from.