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Leslie Bonacum
Neil Allen

States Fuel Infrastructure With Gas Taxes CCH Survey Shows States Are Still Keeping Lid on Sales Taxes, Few Cigarette Tax Increases

(RIVERWOODS, Ill., August 10, 1999) As many Americans drive to the beach, the woods or a national park this summer, they will be paying higher taxes to build and repair the highways they travel over, according to CCH INCORPORATED (CCH), a leading provider of tax and business law information. An annual survey by CCH shows that while a number of states have increased gas prices between last summer and this, state sales tax rates and taxes on cigarettes are largely unchanged.

With state finances in generally good shape, legislators and governors have been able to avoid increasing high-visibility taxes such as income taxes and the sales tax, CCH analyst Ken Traisman, JD, noted.

"Rather, states have found it easier to justify raising gasoline taxes, which are usually dedicated to improving the state’s infrastructure. In addition, with gas prices relatively low during the past year, there has been little resistance to the increased tax rates."

Gasoline Taxes Up

States raising their gasoline taxes include Arkansas, from 18.5 to 19.5 cents per gallon, Kansas, from 18 to 20 cents, Nebraska, from 23.5 to 24.1 cents, North Dakota, from 20 to 21 cents, South Dakota, from 21 to 22 cents and Wisconsin, from 25.4 to 25.8 cents. North Carolina cut its gas levy modestly, from 21.6 cents to 21.2 cents per gallon.

Half the states and the District of Columbia charge 20 cents a gallon or more in gasoline taxes. The state of Connecticut charges the most for a fill-up, 32 cents per gallon, while at 4 cents per gallon Florida charges the least.

Sales Taxes Largely Unchanged

Only one state has raised its sales tax since July of 1998: Nebraska from 4.5 percent to 5 percent. One state, Maine, lowered its sales tax from 6 percent to 5.5 percent.

Five states still do not charge a sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. (Delaware has a merchants’ and manufacturers’ license tax and a use tax on personal property leases.) Elsewhere, rates range from a low of 3 percent in Colorado to a high of 7 percent in Mississippi and Rhode Island.

Few States Raise Cigarette Taxes

Although cigarette tax hikes were common in 1997 and 1998, since last summer, only two states have changed their cigarette levies. Smokers now cough up 87 cents to the state of California for every pack they buy, an increase of 50 cents over this time last year, and the price of puffing in Maryland increased by 30 cents, to 66 cents a pack. Twenty-two states collect more than 40 cents per pack of cigarettes, and in two states, Alaska and Hawaii, smokers must pay $1.00 in state taxes alone for every pack.

State Lines Make a Difference

With a patchwork of tax rates enacted by the several states, travelers can plan their routes with tax savings in mind.

Vacationers traveling through the Northeast might want to plan on fill-ups in New York (8 cents per gallon gas tax), New Jersey (10.5 cents) and New Hampshire (18 cents) rather than Connecticut (32 cents) or Rhode Island (28 cents). If they’re planning to shop, they should consider Delaware, where they will pay no sales tax, and avoid Rhode Island, with its nation-high 7 percent rate.

In the South, Florida has the best deal for motorists with its 4 cents per gallon gas tax. North Carolina has the highest gas tax in the South, at 21.2 cents, but that’s not much more than the median rate of 20 cents per gallon. Virginia has the lowest sales tax in the South, at 3.5 percent, while Mississippi, at 7 percent, has the highest.

Drivers in the Midwest will want to fill up in Indiana, where they’ll pay a fuel tax only 15 cents per gallon rather than Wisconsin, which collects 25.8 cents per gallon. Missouri has the lowest sales tax in the country’s midsection, at 4.225 percent, while shoppers at Minnesota’s Mall of America will pay the most – 6.5 percent.

Those headed west will find the lowest gas taxes in Wyoming (14 cents) and New Mexico (17 cents) while at 27 cents a gallon, Montana is the most expensive western state from a fuel tax point of view. On the other hand, the Big Sky State is a bargain for anyone buying anything other than gas – it has no sales tax.

Cigarette smokers experience drastic changes in what they pay for a pack due to the wide variance in tax rates in differing regions and across state lines.

Tobacco-producing states such as Kentucky (3 cents per pack), North Carolina (5 cents) and South Carolina (7 cents) are notably smoker-friendly. Friendliest of all is Virginia, with a 2.5 cents per pack tax, which is especially attractive for smokers in the neighboring District of Columbia, where the rate is 65 cents per pack.

Indiana, with its 15.5 cent per pack tax, pulls in smokers from bordering Ohio (24 cents per pack), Illinois (58 cents) and Michigan (75 cents). In the West, it can pay for smokers to head East. Crossing the border from California to Nevada lowers the per-pack tax from 87 to 35 cents. Traveling north to Idaho takes the rate down to 28 cents. The smoker who then continues east to Wyoming attains the lowest rate west of the Mississippi: 12 cents per pack.


CCH INCORPORATED, founded in 1913, has served four generations of business professionals and their clients. The company produces approximately 700 print and electronic products for tax, legal, securities, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH web site can be accessed at

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EDITORS NOTE: Illustrative charts and graphs of state taxes data are available by contacting Leslie Bonacum at 847-267-7153 or




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