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August 28, 2020

New Jersey hikes gas tax due to revenue lost amid pandemic

Taxes Gas
NJ Gas Tax Source/

New Jersey's fuel tax is scheduled to increase by 9.3 cents per gallon on Oct. 1, bringing the state's share to 50.7 cents per gallon for regular gas and 57.7 cents per gallon for diesel.

Drivers filling up their tanks in New Jersey will soon be paying 9.3 cents more per gallon after the state announced a fuel tax increase that will take effect October 1.

The rate increase will bring the state tax from 41.4 cents per gallon to 50.7 cents per gallon, making New Jersey's tax the fourth highest behind California, Pennsylvania and Illinois. The state currently has the 10th highest fuel tax in the U.S.

The Treasury Department explained Friday that the decision was necessary because tax revenue has fallen with fewer people on the road during the coronavirus pandemic.

The increased tax revenue will support and ensure the solvency of the state's Transportation Trust Fund, which was established in 2016 under former Gov. Chris Christie. 

The TTF requires that approximately $2 billion be contributed each year, with adjustments based on a model that assumes an increase of $50 million annually for every penny added to the fuel tax, according

"As we've noted before, any changes in the gas tax rate are dictated by several factors that are beyond the control of the administration," State Treasurer Elizabeth Maher Muoio said in a statement Friday. "The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target. When it does not, the gas tax rate has to be adjusted accordingly in order for us to meet our obligation under the law and fully fund the state's many pressing transportation infrastructure needs."

The tax on diesel fuel also will rise by the same amount from 48.4 cents per gallon to 57.7 cents per gallon.

The last time the tax was increased was in 2018, when Gov. Phil Murphy raised the rate by 4.3 cents per gallon.

When the latest increase takes effect, the fuel tax in New Jersey will have increased by more than 250% since the TTF was established in 2016.