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Taxes add to gas prices

By Kay Bell ·
Thursday, May 26, 2011
Posted: 1 pm ET

If you're planning a driving trip this holiday weekend, I hope you budgeted enough for gasoline. Gas prices continue to be near $4 a gallon around the nation and are likely to hold there throughout the summer vacation season.

Taxes contribute to what we pay at the pump. There's the federal gasoline excise tax, which has been at 18.4 cents per gallon since October 1997. Then every state and the District of Columbia adds its own state excise tax.

And don't forget other fees -- usually environmentally related charges, such as a few cents per gallon for fuel storage tanks -- that add to what we pay when we fill up our cars.

The American Petroleum Institute, or API, keeps track of these taxes and fees and each quarter reports on the states' combined gasoline and diesel tax rates.

Since most of us drive gas-powered vehicles, here at Bankrate we put together a showcase of API data, highlighting the 10 states with the steepest combined gas tax rates. I'll let you peruse that gallery at your leisure.

There are, however, 15 states that during the first quarter of 2011 had combined gas tax rates that were greater than the national average of 49.5 cents per gallon.

The other five higher-than-average state gas taxes are in:

  • Rhode Island at 51.4 cents per gallon.
  • Wisconsin at 51.3 cents per gallon.
  • North Carolina at 51.2 cents per gallon.  
  • Pennsylvania at 50.7 cents per gallon.
  • West Virginia at 50.6 cents per gallon.

Wondering where you can get the best tax break on gas? Head to Alaska. The combined gas taxes collected there amount to just 26.4 cents per gallon.

Fuel tax talk: Since it's held steady for almost 14 years, there's been some talk of raising the federal gas tax. But with gasoline prices already around four bucks a gallon, that's a political nonstarter.

Some senators also recently broached the subject of doing away with $21 billion in tax breaks for the oil industry. They thought the fact that the major oil companies recently reported impressive profits might bolster their case.

It didn't. The Senate last week, by a vote of 52-to-48, refused to change the favorable tax way the oil industry is treated.

Another vote may or may not come up in the halls of Congress, but you can be sure that as long as gasoline stays near $4 a gallon and the oil companies keep raking in dough, we'll hear more about this tax, especially as elections approach.

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1 Comment
May 27, 2011 at 1:57 pm

What reason to not repeal the tax break? they make 24 billion in profit in a quarter! tax breaks are for those industries that need help or subsidies. What logical reason to give breaks to an industry that have huge profits?

Is the industry that powerful that they set the government rules? that is just sad.