Rising revenue targets and slightly lower gas use prompt the largest automatic gas tax increase in years. (Photo by Dana DiFilippo/New Jersey Monitor)
By Nikita Biryukov
Reprinted with permission
New Jersey Monitor
New Jersey’s gas tax will rise 4.2 cents per gallon on Jan. 1, the rate driven higher by slightly lower fuel use and a 2024 state law that boosted the tax’s collection targets.
The increase will bring total taxes for gasoline to 49.1 cents per gallon and 56.1 cents for diesel.
New Jersey’s fuel taxes adjust automatically to hit revenue targets under a law signed by then-Gov. Chris Christie in 2016. If fuel use — and, therefore, gas tax revenue — falls, the taxes increase. If fuel use rises, they fall.
The taxes’ collections are sent to the state’s transportation trust fund, which pays for road, bridge, and other transportation projects in the state.
Treasury officials project fuel use will decline slightly, falling by 1%, in the current July-to-June fiscal year, but rising revenue targets accounted for a larger share of the new increase.
In 2024, Gov. Phil Murphy signed legislation reauthorizing the transportation trust fund. That law also raised the fund’s revenue targets. The trust fund must collect about $2.1 billion from fuel taxes in the current fiscal year, up from just over $2 billion in the prior one.
That target will continue to rise until it nears $2.4 billion in the fiscal year that begins July 1, 2028.
As that bill was moving through the Legislature, lawmakers said the increases would raise New Jersey’s gas tax by about 2 cents annually.
New Jersey’s total gas tax rate is made up of two separate taxes. The Petroleum Products Gross Receipts Tax adjusts automatically and will rise with the new year to 38.6 cents per gallon of gas and to 42.6 cents for diesel.
The Motor Fuels Tax does not adjust automatically and charges 10.5 cents per gallon of gasoline, or 13.5 cents per gallon of diesel.
The increase is the largest since fiscal year 2021, which followed the start of the COVID-19 pandemic that took drivers off the road, raising fuel levies by 9.3 cents, an increase erased by reductions over the two following years.
