The New Jersey Department of Treasury has announced a 2.6 cents per gallon increase in the state's gas tax, effective January 1, 2025. This decision follows a detailed examination of fuel consumption data and discussions with the legislative budget and finance officer.
This increase is mandated by a 2024 law that renewed the state's Transportation Trust Fund (TTF) and plans to gradually raise the Highway Fuel Cap from Fiscal Year 2027 through FY 2029. For FY2025, the Highway Fuel Cap is set at $2.032 billion, which represents an increase of $84 million or 4.3% over the previous baseline of $1.948 billion. The cap will continue to rise annually until it reaches $2.366 billion in FY 2029.
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 they are pleased with this funding stream's ability to support transportation infrastructure needs across New Jersey.
Chapter 7 legislation requires nearly $11 billion over five years for transportation infrastructure improvements through TTF funding. To meet these financial requirements, adjustments to the Petroleum Products Gross Receipt Tax (PPGRT) rate are necessary to align with each fiscal year's statutory Highway Fuel Cap.
The gas tax consists of two separate taxes: the Motor Fuels Tax and PPGRT on gasoline and diesel fuel. Under Chapter 7's formula, starting January 1, 2025, PPGRT rates 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—10.5 cents for gasoline and 13.5 cents for diesel—the total tax rates motorists will pay are set at 44.9 cents per gallon for gasoline and 51.9 cents per gallon for diesel fuel.
Additionally, Chapter 7 introduced a fee on zero-emission vehicles not using gasoline, initially set at $250 in 2024 and increasing by $10 each year on July first until reaching $290 in July of 2028.
