Motorists to save as Pa.’s gas tax to drop more than 5% in 2024

Motorists will begin to see a little relief at the gas pump, starting on Jan. 1.

Pennsylvania’s gas tax rate is going down from this year’s 61.1 cents per gallon to 57.6 cents a gallon, according to the state Department of Revenue.

Diesel tax rates too are dropping next year from 78.5 cents per gallon to 74.1 cent per gallon.

The tax, based on the average wholesale price of gasoline, jumped this year to its highest rate since a 2013 law took effect to generate more money for road and bridge projects. But declining wholesale prices allowed Pennsylvania to knock a few cents off the per-gallon cost for 2024.

“Anytime we pay less at the pump is certainly welcome but more particularly welcome this time of year given Christmas and budgets are normally stressed a bit more,” said Ted Leonard, executive director of the Pennsylvania AAA Federation.

The tax on gasoline and diesel can float with the average wholesale price. The 2013 law dictates that the average wholesale price cannot be below $2.99 per gallon. In 2022, the average wholesale price rose to $3.17 per gallon, triggering the tax increase which already was and remains one of the highest in the nation.

Rebecca Oyler, president and CEO of the Pennsylvania Motor Truck Association, said the announcement that the diesel tax rate was decreasing next year is an early Christmas present for the trucking industry following a year that saw the highest cost of trucking on record.

“It is welcome relief for the trucking industry and for all small businesses that drive trucks because most of them use diesel,” she said. “The cost of diesel is really part of everything we buy. Everything that is transported on a truck includes that price of diesel. So even lowering it by a couple cents per gallon does make a difference especially because Pennsylvania has the highest diesel tax rate in the country if you include the sales tax. This really helps.”

Leonard said hopefully consumers will see a bit more of relief at stores from the lowered diesel tax rate as well.

Money generated from the gas tax goes into the Motor License Fund, which funds state and local road and bridge projects and highway safety (state police).

The Pennsylvania Association of Township Supervisors posted a notice on its website stating the decrease in the gas tax could impact the amount of money municipalities receive for local roadway projects in 2025 but added the amount will depend on total gallons sold in Pennsylvania next year.

A report released on Tuesday by the state’s Independent Fiscal Office indicates the gas consumption remains below pre-pandemic levels. It attributes that decline to increased fuel efficiency, the shift to alternatively fueled vehicles and the continuation of hybrid and remote work schedules for some workers that began during the pandemic.

According to a recent U.S. Census Bureau Pulse survey (and consistent with national trends), “26% of Pennsylvania workers 18 or older work from home one or more days per week.”

PennDOT spokeswoman Alexis Campbell said the gas tax adjustment will not impact scheduled PennDOT projects because this year’s budget moved $125 million in Motor License Fund revenues from PA State Police to PennDOT to use for road and bridge projects.

“The department continually monitors expected gas tax revenues and anticipated that there could potentially be a gas tax rate adjustment at the end of the calendar year, and we planned accordingly.,” Campbell said.