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New Jersey gas tax increases November 1, 2016

  • Nov 1, 2016 | Gail Cole

 New Jersey gas tax goes from second lowest in the nation to sixth highest.

Fueling up in New Jersey just got more expensive, thanks to a 23-cent gas tax rate increase that takes effect November 1, 2016.

No one likes to pay more for the same product, be it a movie ticket, a gallon of milk, or a tank of gas. Sticker shock at the pump may be especially high in New Jersey, which has long had the second-lowest gas tax in the nation and now has the sixth-highest. Younger drivers have never even seen a gas tax rate increase — the state hasn’t raised fuel taxes since 1988 (aside from a 4-cent additional tax on petroleum products, added in 1990).

But after a longstanding stalemate, a majority of Democratic and Republican lawmakers agreed to the tax hike in order to generate revenue for the greatly underfunded Transportation Trust Fund. Even Governor Chris Christie (R), a fierce opponent of tax hikes, admitted it was time and signed P.L.2016, c.57 into law on October 14.

New rates

Highway fuel

Companies that refine and/or distribute highway fuels are taxed 12.85% on the gross receipts from the first sale in New Jersey of gasoline and LPG.  On a quarterly basis, the 12.85% tax will be converted to a cents-per-gallon rate based on the average retail price per gallon of unleaded regular gasoline in New Jersey.

Beginning November 1, 2016, the PPGRT on gasoline and LPG is 22.6 cents per gallon, plus an additional tax of four cents per gallon. The Motor Fuels Tax on gasoline and LPG remains unchanged, at 10.5 cents per gallon.

Diesel fuel

The tax rate change for gross receipts from the first sale of diesel fuel, blended fuel that contains diesel fuel or is intended for use as diesel fuel, and kerosene (other than aviation-grade kerosene) will be phased in over time as follows:

  • January 1, 2017 – June 30, 2017: the tax rate increases 8.995% (70% of the 12.85% rate increase on gross receipts)
  • July 1, 2017 on: the full 12.85% tax takes effect

From November 1, 2016 through December 31, 2016, diesel fuel, blended fuel that contains diesel fuel or is intended for use as diesel fuel, and kerosene is still subject to the additional four cents per gallon tax. And the Motor Fuels tax on these products remains 13.5 cents per gallon.

Additional information, including details regarding the tax on imported petroleum products, floor stocks tax, and exemptions, is available on this New Jersey Department of Taxation notice.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.