North Carolinians may have noticed that it has cost a little more to fill their gas tanks since Jan. 1. Some areas of the Tar Heel State have seen prices jump 20 cents a gallon compared to last month when prices were below $2.99 in most areas. Most of the price hike is due to the increase in crude oil prices, but a smaller portion is thanks to a rise in the state’s gas tax.
The tax rose from 38.5 to 40.5 cents a gallon on Jan. 1, which equals an extra $15-$20 a year for those who fill up a 15-gallon tank weekly.
The motor fuel tax changes at the beginning of each year based on a statutory formula that takes into consideration population and energy cost inflation. About 50% of the tax goes toward transportation funding (the remaining 50% comes from DMV Fees and the Highway Use Tax).
The motor fuel tax is then allocated to two state funds. 80% goes to the Highway Fund, which primarily supports projects that help take care of the state’s existing transportation system. This includes resurfacing highways, replacing bridges, and paving unpaved secondary roads. Funds are distributed across North Carolina based on need.
The fund also provides state aid to municipalities for pedestrian, bicycle, and road improvements through the Powell Bill Program.
The remaining 20% of the motor fuel tax goes into the Highway Trust Fund.
The federal gasoline tax is 18.4 cents per gallon and 24.4 cents for diesel.
North Carolina comes in 13th place for the highest gas tax in the country. Pennsylvania has the highest gas tax at 61 cents per gallon and the highest for diesel at 79 cents a gallon.
The average gas price in North Carolina is $3.14 a gallon compared to $3.66 a gallon in Pennsylvania. The national average is $3.29 a gallon.
However, there is a bright side. North Carolinians can use the money from the income tax reduction this year to pay for the increase at the pump.