January 2026 Diesel Fuel Tax by State: A Complete List

Are you struggling to keep up with the biannual changes in diesel fuel taxes? These semi-annual adjustments in January and July can create significant budget variances and complicate transportation spend management.

Without timely and accurate data, even minor tax shifts across different states can lead to inaccurate fuel reimbursements and erode your profit margins. Integrating up-to-date information on state diesel fuel taxes directly into your carrier fuel reimbursement calculations is crucial. By leveraging precise diesel fuel tax by state data, organizations can have more transparent conversations with carriers and ensure your fuel cost strategies remain both effective and fair.

Key takeaways

• Diesel fuel taxes change semi-annually, typically in January and July.

• Diesel fuel tax by state fluctuations directly influence freight costs and your overall transportation spend.

• These tax changes can accumulate significantly across a freight network if they are not accounted for accurately in your fuel management program.

Notable diesel fuel tax by state adjustments

As of January 2026, several states have implemented adjustments to their diesel fuel tax rates. These changes, while seemingly small on a per-gallon basis, have a direct impact on transportation costs and the operational budgets of shippers and carriers. Below is a list of states with notable changes.

Analysis of key state increases

A few states will introduce notable tax hikes, reflecting efforts to maintain consistent revenue streams for infrastructure needs:

• Michigan: Diesel excise tax increased by 1.7 cents, rising to 52.4 cents per gallon. The state recently restructured its excise tax and sales tax for fuels to eliminate the sales tax and build everything into the excise tax. This will ensure all fuels taxes are available only for highway infrastructure investments and will not be diverted elsewhere.

• New Jersey: A 4.2 cent increase in the excise tax, combined with the Motor Fuels Tax, raised diesel taxes to a combined 56.1 cents per gallon. This change is part of a multi-year ramp up in fuel taxes to support the New Jersey Highway Trust Fund for critical infrastructure upgrades.

The complexity behind automatic diesel fuel tax adjustments

Many states use automatic adjustment mechanisms to ensure their diesel fuel tax by state keeps pace with economic conditions. This practice helps sustain long-term funding for transportation projects, but adds a layer of complexity for shippers and carriers. Common methods include:

• Taxes based on a percentage of fuel prices: Rates fluctuate with the wholesale or retail price of diesel.

• Flat excise taxes: These are fixed per-gallon charges on diesel fuel, regardless of fluctuations in fuel prices.

• Inflation-driven calculations: A base rate is adjusted periodically based on an inflation index like the Consumer Price Index (CPI).

These systems are designed to maintain the purchasing power of infrastructure funds. However, they also introduce variability that can challenge traditional fuel surcharge programs and make accurate cost forecasting difficult.

Navigate the impact of diesel fuel tax by state adjustments with confidence

For shippers and carriers, staying informed about diesel fuel tax adjustments is crucial for effective budget management and operational planning. These changes directly influence freight costs, making it essential to proactively adapt strategies for transportation fuel cost reduction.

Ignoring these details can lead to over or under-reimbursing carriers for fuel, which distorts the true cost of transportation fuel spend. A market-based fuel reimbursement program provides the necessary precision to navigate this complex landscape. By calculating reimbursements based on the specific time, tax, price, and geography of each freight movement, you can ensure fairness and accuracy.

If you want to eliminate manual tracking and ensure your fuel cost strategies remain both accurate and effective, it’s time to consider Fuel Recovery.

Frequently asked questions about diesel fuel taxes by state

Which states increased diesel taxes in Q1 2026?

In the first quarter of 2026, Georgia, Michigan, Minnesota, New Jersey, and North Carolina all increased their diesel fuel tax rates. Michigan and New Jersey saw the most significant hikes, with increases of 1.7 cents and 4.2 cents per gallon, respectively.

Why do states adjust their diesel fuel tax rates?

States adjust diesel fuel taxes primarily to fund transportation infrastructure projects, including the construction and maintenance of roads, highways, and bridges. Many states use automatic adjustment formulas tied to inflation or fuel prices to ensure revenue keeps pace with rising costs and economic changes.

How can I manage the impact of changing diesel fuel taxes on my freight budget?

The most effective way to manage the impact is to use a market-based fuel reimbursement program. Unlike traditional DOE-based surcharges, this approach accounts for the exact taxes, price, and location of each fuel purchase. This ensures reimbursements are accurate and reflect the true cost of fuel, protecting your budget from unforeseen variances.