In Brief

Gas tax to drop 8.3 cents in first automatic decline

By: - August 24, 2021 1:19 pm

This is the first time the tax has gone down since a 2016 deal to tie the tax to collections. (Photo by Mario Tama/Getty Images)

New Jersey’s gas tax rate will fall for the first time since a 2016 law coupled the rate to collections, the state Treasury announced Tuesday.

The total tax on gasoline will decline by 8.3 cents, falling from 50.6 cents to 42.4 cents per gallon after new projections showed fuel consumption for the current fiscal year was set to exceed last year’s pandemic-depressed figures. The new price goes into effect Oct. 1.

The tax rate on diesel fuel will fall by the same amount, to 49.4 cents per gallon.

This year’s decline follows a 9.3-cent increase last October. The tax was 14.5 cents per gallon before the 2016 deal.

As part of a deal to designate a dedicated funding source for the state Transportation Trust Fund, which funds infrastructure improvements to New Jersey’s bridges and roadways, lawmakers in 2016 reached a deal that raised the gas tax by 22.6 cents in exchange for cuts to the sales tax rate and the elimination of New Jersey’s estate tax.

That bill included language that allowed the gas tax to automatically adjust to meet an annual revenue target of about $2 billion.

Until Tuesday’s announcement, those adjustments had only bumped the gas tax rate upward. It increased by 4.3 cents in 2018 and was static the following year before increasing in 2020 after travel slumped amid the pandemic.

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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.