New Law Changes North Carolina State Gas Tax System, New Formula Replaces Wholesale Fluctuations Loss

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Just before April 1, North Carolina Governor Pat McCrory signed into law a new measure that changes how the state calculates motor fuels tax amounts, more commonly referred to as the state gas tax.

On March 31 the new law established a cut of 1.5 cents, which lowers the state gas tax from 37.5 cents a gallon to 36 cents a gallon. Cuts of one cent a gallon will also occur on January 1, 2016 and again on July 1, 2016.

Before the new law, motor fuels tax were adjusted twice annually based on the wholesale price of gas. That plan had been in place for the last 25 years and under it the gas tax would have dropped to 30 cents a gallon in July 2015, which would have meant a loss of roughly $400 million dollars in state transportation and maintenance funds according to published reports.

According to the American Petroleum Institute*, North Carolina tied Washington state for the highest state gas tax in the nation at 37.5 cents. North Carolina’s total state and federal excise taxes totaled 56.15 cents a gallon.

Out of the 12 states whose combined state and federal gas tax totals* were greater than 49.5 cents a gallon, the Tarheel state ranked 6th highest behind Pennsylvania (68.90 cents but has no state tax), California (63.79), New York (63.49), Hawaii (63.40) and Connecticut (61.62). After the initial 1.5 cent cut North Carolina will rank 8th highest at 54.65.

Among the 12 lowest combined state and federal tax totals* are neighboring Tennessee (20 cent state, 39.80 combined) and South Carolina (16 cent state, 35.15 combined).  Virginia (19.88 state, 40.78 combined) and Georgia (7.50 state, 44.93 combined) are among the 26 states* that fall between 40.0 to 49.5 combined totals. *Before April 1, 2015 

For a more detailed look at the new law see Senate Bill 20 below.

Map: American Petroleum Institute *
gas tax map

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