New Jersey Gas Tax to Increase by 2.6 Cents per Gallon Starting January 2025

NEW JERSEY - New Jersey motorists will see a 2.6-cent increase in the state’s gas tax starting January 1, 2025, as announced by the Department of the Treasury. This adjustment is required under Chapter 7, a 2024 law mandating annual rate adjustments to fund the Transportation Trust Fund (TTF) program, which finances critical road and bridge infrastructure projects statewide.

The tax increase will bring the total gas tax to 44.9 cents per gallon for gasoline and 51.9 cents for diesel fuel, combining the fixed Motor Fuels Tax with the adjusted Petroleum Products Gross Receipt Tax (PPGRT). The higher rates are designed to help meet the $2.032 billion Highway Fuel Cap for Fiscal Year 2025, representing a $84 million increase over the previous year’s target.

“Based on our review of the consumption data, combined with the requirement to meet the new statutory target, we have determined that the new formula dictates a 2.6 cent increase this coming January,” said State Treasurer Elizabeth Maher Muoio. “We are pleased that this dedicated funding stream continues to provide billions of dollars across the State to support our critical transportation infrastructure needs.”

Why the Gas Tax is Increasing

The TTF program requires $11 billion over five years to fund infrastructure improvements, as stipulated by Chapter 7. The law specifies that the PPGRT rate must be adjusted annually to ensure sufficient revenue to meet the fiscal year's Highway Fuel Cap.

The rate adjustment formula considers two factors:

1. Revenue from prior years: Shortfalls or surpluses in meeting previous Highway Fuel Caps.
2. Projected fuel consumption: Whether current year fuel use will generate enough revenue to meet the fiscal target.

Despite a 0.6% increase in projected fuel consumption for FY2025, the tax rate must rise to align with the new Highway Fuel Cap, which increases annually under Chapter 7, reaching $2.366 billion by FY2029.

Breakdown of New Tax Rates

• Gasoline: The PPGRT will rise from 31.8 cents to 34.4 cents per gallon.
• Diesel Fuel: The PPGRT will rise from 35.8 cents to 38.4 cents per gallon.
  These adjustments, combined with the fixed Motor Fuels Tax (10.5 cents for gasoline and 13.5 cents for diesel), result in the total per-gallon tax rates motorists will pay starting January 2025.

How the Rates Are Determined

State Treasurer Elizabeth Maher Muoio and Legislative Budget and Finance Officer Thomas Koenig finalized the rate after consulting on highway fuel consumption data and revenue projections in November. The statutory formula mandates these adjustments to ensure New Jersey meets its annual infrastructure funding obligations.

Impact on Residents

While the tax increase is relatively modest, it underscores the ongoing need for sustainable revenue to maintain New Jersey’s transportation infrastructure. Motorists will feel the impact at the pump, but the funds collected are earmarked for projects that aim to improve safety, reduce congestion, and maintain aging roadways and bridges across the state.

For more details on the TTF program and its projects, visit the New Jersey Department of the Treasury website.

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