Wednesday, May 6, 2015

One-cent increase in gas tax starts July 1

The Rhode Island gasoline tax will increase by one cent starting July 1. The tax, commonly known as the “gas tax,” is currently 32 cents a gallon. Based on Division of Taxation calculations that take inflation into account as required by statute, the tax will increase by one cent, to 33 cents per gallon, effective July 1, 2015. 

It will be the first time that the gas tax will increase as a result of the new inflation indexing formula enacted in 2014. Legislation enacted on June 19, 2014, requires that the tax be adjusted every two years based on inflation. 

The adjustment to take effect July 1, 2015, represents a 3.125 percent increase in the gas tax.

The mandatory inflation adjustment for gasoline applies only to the 32-cent Rhode Island
gas excise tax; it does not apply to the 1-cent Rhode Island environmental protection regulatory
fee or to the 18.4-cent federal excise tax. (The overall tax on a gallon of gasoline in Rhode
Island is 51.4 cents, according to American Petroleum Institute figures as of April 1, 2015.)

The one-cent increase in the gas tax that takes effect July 1, 2015, also applies to diesel and
other taxable motor fuels that meet the definition of “fuels” under Rhode Island General
Laws § 31-36-1(4).

  • Revenue from the tax is used for road and bridge maintenance, principal and interest payments on transportation bonds, RIPTA, and other purposes. 
  • It is estimated that a one-cent increase in the gas tax will generate $4.2 million in revenue for fiscal year 2016.
  • The gas tax was last increased in 2009, when it went from 30 cents to 32 cents effective July 1, 2009.
  • The next time the tax is to be adjusted based on inflation is July 1, 2017.
  • To view the Advisory on this subject, click here. To view the Notice, click here.