When you pull up to the pump, a significant portion of what you pay goes directly to federal and state governments as fuel tax. Most drivers know taxes are part of the price but few realize just how much they vary from state to state — or how dramatically that variation affects the final number on the pump display.
The Federal Baseline
Every gallon of gasoline sold in the United States includes a federal excise tax of 18.4 cents per gallon. This has not changed since 1993 and applies uniformly nationwide. It funds the Highway Trust Fund, which finances federal highway and transit programs. Whatever state you are in, this 18.4 cents is already built into the price before your state adds anything on top.
The Highest Gas Tax States in 2026
California leads the country by a significant margin. The state excise tax on gasoline exceeded 68 cents per gallon in 2026 — and that is before local taxes that apply in certain counties and cities. Combined with the federal tax, California drivers pay over 85 cents per gallon in taxes alone before any other cost factors are added.
Pennsylvania is consistently one of the highest taxed states for gasoline, with a state tax structure that includes an oil company franchise tax tied to wholesale fuel prices. Illinois has among the highest combined state and local tax burdens in the country, particularly in the Chicago area where city and county taxes stack on top of the state rate.
Washington, Hawaii, and Nevada round out the upper tier of high-tax states, each charging well above the national average in state-level fuel taxes.
The Lowest Gas Tax States in 2026
Alaska charges the lowest state gas tax in the country at just 9 cents per gallon — a fraction of what California charges. Despite this low tax rate, Alaska gas prices are still among the highest in the nation due to the extreme cost of shipping fuel to remote locations.
Mississippi, Missouri, and Oklahoma are among the lowest-taxing states in the continental United States, each charging under 25 cents per gallon at the state level. Combined with their location near Gulf Coast refining infrastructure, these states consistently post some of the lowest average gas prices in the country.
Why Low Taxes Do Not Always Mean Low Prices
It is tempting to assume that low-tax states always have cheap gas, but the relationship is not that simple. Alaska is the clearest example — minimal taxes but very high prices due to logistics costs. Hawaii faces a similar dynamic, with high taxes compounding already elevated shipping costs to produce some of the highest prices in the nation.
Conversely, some moderate-tax states in the Gulf Coast region benefit so strongly from proximity to refining infrastructure that their prices remain competitive despite tax rates that are not especially low.
How Taxes Show Up at the Pump
When you see a gas price of say $3.50 per gallon, a rough breakdown in an average state might look like this: approximately $2.20 to $2.40 represents the wholesale cost of the fuel itself, around 18 cents is the federal tax, another 25 to 50 cents depending on your state is state tax, and the remainder covers retailer margin, credit card fees, and local operating costs.
In a high-tax state like California that same gallon could easily include 85 cents or more in combined taxes, which is why California prices regularly run a dollar or more above the national average even when crude oil prices are the same everywhere.
Taxes Are Only Part of the Story
As significant as taxes are, they are one of several factors that determine what you pay. Fuel blend requirements, refinery proximity, pipeline access, and local market competition all layer on top of the tax structure to produce the final price. For a full picture of what is driving prices in your state right now, the daily state rankings on the Gas Prices Live homepage show current averages alongside weekly and monthly trends for all 50 states and Washington D.C.