Higher Gas Prices Could Result in Paying More in Taxes
As drivers across many states start to see an increase in gasoline prices (expected to be higher than it has been for a few years!) they better be prepared to pay more in taxes, too, according to a recent Bloomberg Tax article.
Because of the gas price spike, a few states—California, Connecticut, Kentucky, Maryland, Nebraska, New Jersey, New York, North Carolina, Pennsylvania, Utah, Vermont, Virginia and West Virginia, as well as the District of Columbia—will see revenue gains since their tax rates are tied to the price of fuel, rather than its volume.
Although some states that tax the price rather than the gallon will see revenue gains, others won’t—not yet, anyway. For example, Pennsylvania’s gas tax won’t rise unless average wholesale gas prices for the year rise above $2.99 per gallon. On the other hand, Hawaii, Illinois, Indiana and Michigan will see some revenue gains if prices remain high because they apply their general sales tax to fuel.
AAA predicts gas prices may potentially increase by 5 to 10 cents more through Memorial Day, but does not expect the national average to hit $3 per gallon this year, although many states have already reached this benchmark.
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