Road Taxes and Funding by State, 2026

Federal, state, and local governments raise revenues for road infrastructure and maintenance through a combination of taxes on motor fuel, fees on vehicles (like registration and licensure), and direct levies on drivers (like tolls). This system constitutes a relatively well-designed user fee A user fee is a charge imposed by the government for the primary purpose of covering the cost of providing a service, directly raising funds from the people who benefit from the particular public good or service being provided. A user fee is not a tax, though some taxes may be labeled as user fees or closely resemble them.system, where roadway expenditures are largely funded by the people who use the roads, generally in proportion to the extent of their use.

However, these road taxes and fees are far from a perfect user fee, especially as inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a "hidden tax," as it leaves taxpayers less well-off due to higher costs and "bracket creep," while increasing the government's spendin,electric vehicles (EVs), and fuel efficiency gains erode gas taxA gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline.revenues per mile of road driven. Most states fail to collect enough in user fees to fully provide for roadway spending. This necessitates transfers from general funds or other revenue sources that are unrelated to road use to pay for road construction and maintenance.

The amount of revenue states raise through roadway-related revenues varies significantly across the US. Only two states-Maryland and New Jersey< /a>-raise enough revenue to fully cover their highway spending. The remaining 48 states and the District of Columbia must make up the difference with tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.revenues from other sources. The states that raise the lowest proportion of their highway funds from transportation-related sources are Alaska (17.4 percent) and North Dakota (26.8 percent), both states that rely heavily on revenue from severance taxes.