Don't Mess With Taxes

Some roads, like this rural one in Central Texas, don't get much funding from the state. (Photo by Kay Bell)

I know, spring just officially arrived last week. But temperatures already in the 80s here in Central Texas have me contemplating summer travel.

Thinking back on my family’s summer road trips when I was child, also made me realize that my interest in the tax world was foretold back then.

Every time we’d run into a travel delay due to road crews repairing and/or resurfacing our routes across the Lone Star State, my father would announce, “Your tax dollars at work.”

Dad was correct back then and, as a new analysis by the Tax Foundation shows, now.

“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 or licensure, and direct levies on drivers like tolls,” note Jacob Macumber-Rosin and Adam Hoffer in the introduction to the Washington, D.C.-based tax policy nonprofit’s report Road Taxes and Funding by State, 2025.

“This system constitutes a relatively well-designed user fee system, where roadway expenditures are largely furnished by the people who use the roads generally in proportion to the extent of their use,” add the two Tax Foundation excise tax experts.

Many revenue sources needed for roads: But, and there’s generally a but when it comes to all taxes, Hoffer and Macumber-Rosin point out that “these road taxes and fees are far from a perfect user fee, especially as inflation, electric vehicles, and fuel efficiency gains erode gas tax revenues per mile of road driven.”

And because road use fees fall short of fully funding roadway systems in most states, the pair notes that governments must transfer revenues from other sources to road expenditures.

“By diverting general funds to roadway spending, the burden of paying for the roads falls on all taxpayers, including people who drive very little or may not drive at all,” write Hoffer and Macumber-Rosin.

Their analysis takes a lengthier trip through ways to better fund our nations’ highways, including the controversial vehicle miles traveled tax, or VMT. Personally, I’d prefer a VMT.

Full disclosure, that’s largely based on the selfish fact that the hubby and I don’t commute and haven’t taken a long road trip in ages, focusing instead on shorter day trips in the area, especially during wildflower season, as noted by my photo at the top of this post.

Only three states cover costs with road-related revenue: Another disclosure is that this post features this weekend’s By the Numbers selection.

That number is three, which the Tax Foundation report says is how many raise enough revenue through roadway-related revenues to fully cover their highway spending. Those three highway self-sufficient jurisdictions are Delaware, Montana, and New Jersey.

The other 47 states and District of Columbia must make up the difference with revenues from other sources.

The states that raise the lowest proportion of their highway funds from transportation-related sources are Alaska, at 19.4 percent, and North Dakota, at 35.1 percent, of which rely heavily on revenue from severance taxes.

The Tax Foundation map below provides a visual overview of where your state currently stands as far as highway taxes.

Check out the full report for an interactive version of the map, as well as maps from other states, as well as a table with rankings, and the latest transportation tax updates from across the United States.

You also might find these items of interest:

• Want an EV? Buy before Trump eliminates the tax credit
• Gasoline tax considerations for Memorial Day travel (2024)
• Business mileage tax deduction rate goes up in 2025, other three are unchanged

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