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Transportation Funding & Financing

Local Motor Fuel Taxes

Fifteen states authorize local option motor fuel taxes, primarily located in the Midwest, West, and South. In five states (Alabama, Florida, Hawaii, Illinois, and Nevada), their use is widespread; in the remaining states, only in a few counties or cities are they utilized. The revenue base provided by these optional taxes is supplemental in nature because significantly high rates, on the order of state or federal motor fuel tax rates, would likely cause users to purchase fuel outside the local area levying the tax.

The American Petroleum Institute provides a frequently updated table summary of state motor fuel taxes that includes notes on the inclusion of local option taxes in those rates.