4 States Have Begun Charging Higher Diesel, Gas Taxes

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The states of Michigan, New Jersey, Minnesota and Florida adopted fuel-tax increases for 2026, while just one state — Utah — reduced its motor fuel tax rates.

All of the changes took effect Jan. 1.

Utah’s fuel taxes fell by 1.55% to 37.9 cents per gallon for diesel and gasoline after a recalculation based on a formula the state follows to set rates.

The state sets its fuel tax rates at 14.2% of the statewide average motor fuel rack price for the prior three fiscal years. Following this method, taxes slid a modest 0.6 cent for 2026, according to a bulletin issued by the Utah State Tax Commission.

Michigan

The story was very different in Michigan, where a rule change resulted in a large jump in fuel-tax rates.

Michigan previously maintained a fixed 31-cent-per-gallon motor fuel tax and a conditional 6% sales tax on motor fuel purchases.

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But state legislators last year passed a law to increase the base per-gallon tax on gasoline and diesel fuel to 51 cents from 31 cents per gallon. They also applied a 2.7% inflation adjustment to the base rate that lifted the number to 52.4 cents per gallon.

The Michigan Department of Treasury said the new formula replaces “a volatile tax calculation for a predictable one.” The prior formula consisted of a base rate plus an added sales tax that varied depending on fuel prices, it noted.

The bulk of the revenue collected from tax increase will be allocated to the Michigan Transportation Fund. About 69% of the money will fund work on state highways and county roads, with 19% being allocated to cities and villages. Around 2% will go to local recreation projects, while the remainder will go to public transit.

New Jersey

In the Garden State, a projected 1% decline in the fiscal year 2026 consumption of diesel and gas resulted in a bump in motor fuel taxes. Diesel will now be taxed at 56.1 cents per gallon, while the gas tax rose to 49.1 cents per gallon.

The rate hikes factored in graduated increases established by law attached to New Jersey’s Transportation Trust Fund program, which directs the state to steadily increase fuel taxes between fiscal years 2025 and 2029.

“Due to the new statutory target, and because actual consumption has trended below last fiscal year’s levels, our analysis of the new formula dictates a 4.2-cent increase,” State Treasurer Elizabeth Maher Muoio said in December. “We emphasize that this dedicated funding stream continues to provide billions of dollars across the state to support our critical transportation infrastructure needs.”

The New Jersey Department of Treasury said the program will provide “nearly $11 billion over five years to support critical infrastructure improvements to the state’s roadways and bridges.”

Florida

A 1.79% annual increase in diesel fuel taxes took effect in Florida, raising state and county rates to 38.9 cents per gallon compared with 38.2 in 2025. The increase for diesel included a state tax rate adjustment for all motor fuels to 22 cents per gallon from 21.5 cents.

“Florida law requires annual adjustments to the state fuel tax rates and the State Comprehensive Enhanced Transportation System tax rate based on the National Consumer Price Index,” the Florida Department of Revenue said in a Nov. 19 statement.

These funds will be used to pay for state transportation projects.

Minnesota

Minnesota’s motor fuel tax rose by 2.5% on diesel, biodiesel and gasoline to 32.6 cents per gallon. This excise tax adjustment is linked to a formula governed by state law.

States traditionally change their motor fuel excise taxes either every Jan. 1 or July 1, typically because of legislative mandates. Some motor fuel rate changes are tied automatically to fluctuating national inflation rates and tax formulas. Others move up or down depending on specific transportation funding measures.