July 1 Gas Tax Increase in Several States: What You Need to Know

(Image credit: Getty Images)

As we move beyond Independence Day, some drivers face rising gas taxes at the pump. While the national average gas price is hovering around $3.49 per gallon, according to AAA, seven states have just implemented fuel tax hikes.

July gas tax increase: California, six more states

These increases, which took effect today, July 1, will likely impact your wallet as you fill up for road trips and summer activities.

But it's not all bad news. Gas tax rates were reduced a bit in a couple of places, offering some relief. Is your state one of them?

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

California gas tax increase 2024

California continues to lead the nation with the highest gas tax in 2024, which climbs to 69.8 cents per gallon as of July 1. This increase pushes the Golden State's average price for a gallon of regular gasoline to about $4.79.

In other tax news, California also has a new gun and ammo tax effective July 1. Additionally, the state's Supreme Court just removed an initiative from the California November ballot that proposed to have taxpayers weigh in on state tax hikes.

Gas tax increase Illinois

Not far behind, Illinois is raising its gas tax to 47 cents per gallon, a 3.5% increase from its previous rate of 45.4 cents per gallon. For 2024, the Land of Lincoln again ranks among the country's most expensive states for gas taxes.

Illinois also has one of the highest sales tax rates in the U.S., but it's one of the states that doesn't tax retirement income.

Indiana gas tax increase

Indiana motorists will also see a bump in their gas tax as of July 1. Gas tax in the Hoosier State reaches 56.1 cents per gallon when additional fees are factored in. The per gallon gas tax rate rose from 34 cents to 35 cents.

Virginia gas tax rate

Virginia is implementing a modest gas tax increase to 30.8 cents per gallon from 29.8 cents as of July 1. While not as steep as some other states, this hike still contributes to the overall cost of driving a vehicle in the Commonwealth.

Missouri gas tax increase

Missouri is making a more substantial jump, with its motor fuel tax rising to 27.5 cents per gallon from 24.5 cents per gallon. This increase may come as a surprise to Show-Me State residents accustomed to lower gas taxes. The average price of a gallon of regular in Missouri is about $3.13.

Also, as Kiplinger reported, Missouri recently became more tax-friendly toward retirees. The state repealed its income tax on Social Security retirement benefits, effective for the 2024 tax year.

Colorado and Nebraska

Nebraska and Colorado are adjusting their gas tax rates, though less dramatically. Nebraska is adding a half-cent to its fuel tax (making it 30.5 cents per gallon). In addition to small road usage and environmental fee increases, Colorado's gas tax rate as of July 1 is 27.9 cents per gallon.

*It's important to note that state taxes are levied in addition to the federal gas tax of 18.4 cents per gallon of regular and 24.4 cents per gallon of diesel.

States lowering gas tax this summer

Not all states are increasing gas taxes. Starting July 1, you'll be paying a bit less at the pump in Kentucky, thanks to a decrease in the Commonwealth's gas tax.

The tax in the Bluegrass State will drop by 2.3 cents per gallon, bringing it down to 27.8 cents.
Savings for motorists are reportedly estimated to be about 32 cents per fill-up for a 16-gallon tank.

Maryland’s state gas tax decreases slightly on July 1, offering some relief at the pump. This adjustment is due to a law that adjusts the tax based on economic factors, sometimes resulting in reductions even when there is inflation. The average price for a gallon of regular in Maryland is about $3.56.

New gas tax: Bottom line

While gas tax increases may be unwelcome news for drivers, it's worth remembering that these taxes often fund infrastructure projects and environmental initiatives.

Whether commuting to work or planning road trips, being aware of these tax changes can help you budget accordingly and consider more fuel-efficient alternatives (like states with low gas taxes) when possible.

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.