The average price of gasoline in the U.S. has increased by almost 75 cents per gallon during the past year, yet only a handful of states will benefit from additional tax revenue, according to a report released Tuesday by the Tax Foundation.
The report by the Tax Foundation, a nonprofit group that monitors government tax policies, noted that the federal government and every state impose an excise tax on the sale of gasoline as a fixed number of cents per gallon. The states’ excise tax ranges from 4 cents to 35.3 cents per gallon. But because the tax rate is fixed regardless of price, states will see no increase in gas excise tax revenue as gas prices rise. They may even see a drop in revenue if demand decreases because of the higher prices.
However, some states apply a sales (or similar) tax to gasoline on top of their excise tax. As a result, when gas prices go up, these states will receive additional tax revenue.