The New Jersey Department of the Treasury has announced a gas tax rate increase of 2.6 cents per gallon, effective January 1, 2025. This decision follows a comprehensive review of fuel consumption statistics and discussions with the Legislative Budget and Finance Officer. The adjustment aims to support the State’s Transportation Trust Fund (TTF) program.
The increase is mandated by the 2024 law, known as Chapter 7, which incrementally raises the State’s Highway Fuel Cap from Fiscal Year 2025 through Fiscal Year 2029. For FY2025, the Highway Fuel Cap is set at $2.032 billion, marking an $84 million increase from the previous baseline level.
State Treasurer Elizabeth Maher Muoio stated, “Based on our review of the consumption data, combined with the requirement to meet the new statutory target, we have determined that the new formula dictates a 2.6 cent increase this coming January.” She added that this funding stream supports critical transportation infrastructure needs across New Jersey.
Chapter 7 requires New Jersey's TTF program to provide nearly $11 billion over five years for infrastructure improvements. To meet these financial demands, adjustments in the Petroleum Products Gross Receipt Tax (PPGRT) rate are necessary to generate sufficient revenue for each fiscal year's Highway Fuel Cap.
The "gas tax" or "highway fuels tax" comprises two separate taxes: the Motor Fuels Tax and PPGRT. According to Chapter 7's formula, on January 1, 2025, the PPGRT rate will rise from 31.8 cents to 34.4 cents for gasoline and from 35.8 cents to 38.4 cents for diesel fuel. Including the fixed Motor Fuels Tax rates—10.5 cents for gasoline and 13.5 cents for diesel—the total tax rates will be 44.9 cents and 51.9 cents per gallon respectively.
Under Chapter 7's statutory formula, annual adjustments to the PPGRT rate are based on whether revenues met targets in prior fiscal years or if projected consumption aligns with current fiscal year requirements.
In November consultations between Treasurer Muoio and LBFO Thomas Koenig finalized FY2025's Highway Fuel Cap at $2.032 billion as stipulated by statute.
Projections indicate a slight increase in gasoline and diesel fuel consumption by about 0.6 percent over FY2024 levels, necessitating a higher PPGRT rate in FY2025 due to increased Highway Fuel Cap requirements.
