(The Center Square) – New Jersey motorists will soon see some relief at the pumps as the state will lower its gas tax rate by 8.3 cents per gallon starting Oct. 1.
With the reduced tax, motorists will pay a total of 42.4 cents in state taxes for gasoline and 49.4 cents for diesel fuel, down from 50.7 cents per gallon for gasoline and 57.7 cents per gallon for diesel fuel.
The change is part of a 2016 law that requires steady revenue for the Transportation Trust Fund (TTF). Under the 2016 law, the TTF program must bring in $16 billion over eight years for state infrastructure improvements.
“Because actual consumption in Fiscal Year 2021 was so closely in line with our projections made last August, coupled with the fact that consumption in the current fiscal year is projected to be above last fiscal year’s levels, our analysis of the formula dictates an 8.3 cent decrease this coming October,” State Treasurer Elizabeth Maher Muoio said in an announcement.
The state’s “gas tax” – also called the “highway fuels tax” – includes separate taxes on gasoline and diesel fuel: the Motor Fuels tax and the Petroleum Products Gross Receipts (PPGR) tax. The law requires the PPGR to generate roughly $2 billion per year.
On Oct. 1, the PPGR tax rate will go from 40.2 cents to 31.9 cents for gasoline and 44.2 cents to 35.9 cents for diesel fuel. The Motor Fuels Tax is fixed at 10.5 cents for gasoline and 13.5 cents for diesel fuel.
New Jersey officials expect highway fuel revenue collections in fiscal 2021 to exceed the fiscal 2020 target by $58.8 million. The projected revenue gains for fiscal 2021 were offset by a fiscal 2020 shortfall that was $8.1 million above the $156 million one projected last August, officials said.
The Garden State has one of the highest gas taxes in the country.
According to the Tax Foundation, California had the highest state gas tax rate of 66.98 cents per gallon. Illinois came in second with taxes of 59.56 cents per gallon, followed by Pennsylvania at 58.7 cents per gallon.
Motorists also pay the federal government 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel.