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Virginia to Move to Variable Fuel Tax Rate Effective July 1, 2013

Virginia is changing from a flat rate fuel tax to a variable rate fuel tax effective July 1, 2013.  The state is adopting a variable fuel tax rate of 3.5% of the average wholesale price of a gallon of gasoline and 6% of the average wholesale price of a gallon diesel.  The average wholesale price (meaning the rack price) to be used in determining the tax rate will be published by the Tax Commissioner twice a year - in June for the period July 1 through December 31 and in December for the period January 1 through June 30.  The statute provides that the average wholesale price must at all times be no less than the average price as of February 20, 2013.  For example, if the average wholesale price of a gallon of gasoline is $3 for the period July 1 through December 31, the tax rate for a gallon of gasoline will be $0.105 per gallon.  The current rate is $0.175 per gallon. The legislation makes no changes to the jet fuel tax which remains a flat rate of $0.05 per gallon for the first 100,000 gallons and $0.005 per gallon thereafter.  The legislation also makes no changes to the point of taxation or license requirements.

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