State Taxes

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Pennsylvania To Eliminate Fuel Tax and Move Entirely To Oil Company Franchise Tax

Pennsylvania’s governor has signed into law sweeping transportation legislation that includes significant changes to the way the state taxes motor fuel.  Beginning on January 1, 2014, the $0.12 per gallon Liquid Fuel and Fuel Tax will be eliminated and the State will tax gasoline and diesel fuel solely through the Oil Company Franchise Tax collected by licensed distributors on sales to unlicensed entities.    The Oil Company Franchise Tax is set to increase annually under the law.  The law does not state any changes to the taxation of jet fuel.

The new law prescribes an annual increase in both the millage rate and the average wholesale price of fuel on which the tax rate is determined.  The millage rate is increased by an additional 64 mills in calendar year 2014, 49 mills in calendar year 2015, 48 mills in calendar year 2016, 41 mills in calendar year 2017, and 39 mills in each succeeding calendar year.   The average wholesale price of fuel will increase to $1.87 after December 31, 2013, and before January 1, 2015; $2.49 after December 31, 2014, and before January 1, 2017; and after December 31, 2016, the average wholesale price will be determined by the Department of Revenue, but in no case will the average wholesale price be less than $2.99 per gallon.

Based on this, the Oil Company Franchise Tax rates for calendar years 2014 through 2016 will be as follows:


Gasoline

 

Total Mills Per Gallon

Wholesale Price of Fuel

Tax Rate (Rounded to Next Highest Tenth)

2014

217.5

$1.87

$0.407

2015

202.5

$2.49

$0.504

2016

201.5

$2.49

$0.502

2017

194.4

TBC

TBC

2018

192.5

TBC

TBC

Diesel

 

Total Mills Per Gallon

Wholesale Price of Fuel

Tax Rate (Rounded to Next Highest Tenth)

2014

272.5

$1.87

$0.510

2015

257.5

$2.49

$0.641

2016

256.5

$2.49

$0.639

2017

249.5

TBC

TBC

2018

247.5

TBC

TBC