North Carolina ranks 11th in the nation for the highest gas tax, according to a new report out from the Tax Foundation. This is an improvement on last year, dropping two places from ninth.
The average gas tax in North Carolina is 40.55 cents per gallon, down from last year’s 40.65 cents per gallon. Alaska remains the state with the lowest gas tax, holding steady from last year at 8.95 cents per gallon. California has the highest gas tax in the nation, at 70.92 cents per gallon, followed by Illinois at 66.4 cents per gallon. According to the Tax Foundation, California, Oregon, and Washington all have environmental programs, making those states gas price outliers.
According to the report, the gas tax operates as a user fee, requiring drivers to pay for the construction and upkeep of the roads they travel. User fees ensure that government services are borne by those who directly benefit from them rather than taxpayers who may not use those services. This structure, the Tax Foundation says, is especially well-suited to transportation, where the link between usage and benefit is direct and measurable.
In this state, the tax revenue goes to the Highway and Highway Trust Funds under the North Carolina Department of Transportation (NCDOT) for road maintenance and construction.
“North Carolina has the 11th-highest gasoline tax in the nation; however, that funding model is outdated,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal. “The motor fuels tax is no longer a reliable way to fund our roads as vehicles become more fuel-efficient and electric cars grow in number. Even after fee increases, EV drivers pay less yearly than most gasoline-powered drivers contribute through the gasoline tax, leaving a growing hole in road funding. Lawmakers should replace this outdated system with a vehicle miles traveled tax that ensures every driver pays their share and provides a stable, long-term solution for maintaining our highways.”
The emergence of electric vehicles allows many to sidestep the user fee and not pay for their share of wear and tear on the roads. To close this loophole, many states have considered implementing a vehicle mile traveled (VMT) tax or a mileage-based user fee (MBUF).
The gas tax downturn would continue to accelerate if former Gov. Roy Cooper’s goal of increasing electric vehicles (EVs) to 1.25 million by 2030 is met.
If the goal is met, EVs will account for 14% of North Carolina’s vehicular fleet by 2030, according to the John Locke Foundation’s “Lighting The Path” report.
“Such an outcome is unlikely, however, even before considering the costs,” reads the report. “It would require the number of new EVs to double every two years, but ZEV [zero-emission vehicle] registrations have been recently slowing, not increasing.”
The annual registration fee for EVs of $214.50 generates about $50 less in revenue for the state than the typical driver of a gasoline-powered vehicle.
Editor’s note: This article has been corrected to indicate that the 2024 gas tax in North Carolina was 40.65 cents per gallon, only slightly higher than in 2025. An earlier version had used the California number instead.