Illinois Politics

Illinois' gas tax will increase next week, and here's what you need to know

The fuel tax increases at the start of the new fiscal year and is based on inflation

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Illinois motorists will notice a small increase in their gas prices beginning next month, as the state's tax on fuel will rise by more than 3%.

According to the Illinois Department of Revenue, the state's gasoline tax will rise from $0.454 cents per gallon to $0.47, an increase of just over 3.5%.

The state's tax on diesel fuel will also rise from $0.529 to $0.545 per gallon, an increase of just over 3%.

The state of Illinois passed laws governing increases in gas taxes in 2019, when lawmakers increased the tax from $0.19 per gallon to $0.38 per gallon after nearly 30 years without increasing the tax rate.

Aside from a brief moratorium on increasing taxes, spurred by rapid inflation following the COVID pandemic, the state has now increased the tax on three occasions over the last two years, doing so in Jan. 2023 and in July 2023.

According to officials, the state’s tax on fuel is set to increase each year and is indexed for inflation.

The fuel tax is used to fund construction projects at both the state and local levels. Illinois voters added an amendment to the state’s constitution in 2016 to prohibit those revenues for being used for anything other than transportation costs.

Since July 1, 2023, Illinois has collected $2.67 billion in taxes on fuel, according to Illinois State Comptroller Susana Mendoza’s office.

Illinois sales taxes are also applied to fuel, according to officials. Motorists also pay an excise tax on fuel, which is administered by the federal government. Gas is taxed at a rate of $0.184 cents per gallon at the federal level, according to the US Department of Energy.

According to the Tax Foundation, Illinois has the second-highest tax rate on fuel in the country, trailing only California.

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