3 mins

Diesel Fuel Tax Update by State | Advisor Pulse

Matt Muenster


Matt Muenster
January 12, 2023


Diesel taxes are usually adjusted in January and July, which are the most common months for state budget proposals. As of January 12, eleven states have communicated tax changes. Details of each state’s diesel tax changes are outlined below, along with new sustainability initiatives in Washington.

Georgia and New York’s Fuel Tax Holidays Conclude

Georgia’s fuel tax holiday ended on January 10, 2023, after serving as inflation relief to consumers for ten months. Politicians in Georgia have publicized that the tax holiday likely won't return because the program would cost the state an estimated $1.7 billion in revenue. New York suspended their fuel tax relief that was supposed to go through the calendar year 2023. Their new tax per gallon of diesel is 51.1 cents, which is an increase of 17.9 cents over the prior year. The increase is a result of reinstating the excise tax, prepaid sales tax, and state sales and use taxes.

Washington Applies Carbon Cost

Washington implemented two new sustainability initiatives to put a price tag on carbon: The cap-and-invest program and the Clean Fuel Standard (CFS). The price of the carbon cost initiatives can change daily. On the day of publication, the cap-and-invest program cost 42.3 cents per gallon and CFS cost an extra 1.43 cents per gallon. Minimal carbon cost movements in January have caused the impact on the cost of diesel to be small. Diesel prices in Washington will continue to be influenced by these programs.

Percentage-Based Methods

Several states fluctuate on a semi-annual or annual basis, depending on fuel prices, inflation, or other legislative means. These states include Florida, Illinois, Michigan, North Carolina, Nebraska, Pennsylvania, and Utah. In January, these fluctuations ranged from a 1.2-cent to a 4.5-cent increase.

Lower Taxes in California

Instead of considering inflation or other legislative means, California’s tax structure floats with the price of fuel. This methodology can be seen as a win-win for shippers, but when the price of wholesale diesel rises the cost of state taxes will also increase.

The Greater Impact on Your Transportation Network

Diesel tax adjustments and the addition of the cost of carbon directly impact the overall cost of diesel per gallon. Breakthrough continues to follow market events and analyze our robust dataset to offer clear information to the whole supply chain and calculate an accurate fuel reimbursement based on the time, price, tax, and geography associated with freight shipments.

If you have a question or comment, please contact the Applied Knowledge team at AppliedKnowledge@BreakthroughFuel.com.