The Alabama gas tax is $0.30 per gallon on gasoline and $0.31 per gallon on diesel, effective July 1, 2025.1Alabama Department of Revenue. Motor Fuels Tax Rates You pay it at the pump, but suppliers and distributors actually remit it to the state. The money is restricted to road and bridge work and is divided among the state, counties, and cities by formula.
What You Actually Pay at the Pump
The state excise tax is one of three layers. On top of Alabama’s rate, the federal government adds 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel. Both figures include a 0.1-cent Leaking Underground Storage Tank fee, and the federal rate has not changed since 1993.2Office of the Law Revision Counsel. 26 U.S. Code 4081 – Imposition of Tax
Alabama counties and municipalities can levy their own local gas taxes on top of that, and local rates vary widely, from about a cent to several cents per gallon depending on where you fill up. All in, an Alabama driver pays somewhere between roughly $0.49 and over $0.55 per gallon in combined gasoline taxes, depending on the station’s location.
Why the Rate Keeps Going Up
Alabama’s base excise tax sat at $0.18 per gallon on gasoline and $0.19 on diesel until the Rebuild Alabama Act took effect in September 2019. That law added $0.10 per gallon in three steps between 2019 and 2021.3Alabama Department of Revenue. Notice: Rebuild Alabama Act
Since then, the rate has adjusted automatically. Alabama ties its gas tax to the National Highway Construction Cost Index, a Federal Highway Administration measure of road-building costs, and the rate recalculates every two years without any legislative vote.4Alabama Department of Revenue. Rebuild Alabama Act Notice February 2025 A single cycle can move the rate up or down by no more than $0.01 per gallon.
Both adjustments so far have hit that cap. The first added a penny on October 1, 2023, and the second added another penny on July 1, 2025, producing today’s $0.30 and $0.31 rates. The next adjustment is scheduled for July 1, 2027, and will happen on July 1 of each odd-numbered year after that.
Where the Money Goes
Revenue from the Rebuild Alabama portion of the tax follows a mandatory split after collection costs and refunds come out:5Alabama Legislature. Alabama Code 40-17-371 – Cost of Collection; Distribution of Tax Proceeds
- 66.67% to the Alabama Department of Transportation for state-maintained roads and bridges. ALDOT cannot spend this money on employee salaries or benefits unless those costs are part of a direct construction project subject to audit.
- 25% to county governments for local transportation infrastructure.
- 8.33% to municipal governments for city streets and bridges.
Every level of government has to spend the money on transportation. For local gas taxes levied after August 2023, state law limits spending to road construction and maintenance, mass transit, traffic regulation, and traffic law enforcement.6Alabama Legislature. Alabama Code 40-17-362.1 – Use of Motor Fuel Taxes for Road and Bridge Purposes; Exceptions
When You Can Get the Tax Back
Because the gas tax funds road infrastructure, fuel that never touches a public road can be sold tax-free or refunded. The most visible example is dyed diesel, which carries a visible dye marking it as untaxed and is sold for off-highway use in farm equipment, construction machinery, and the like.
If you buy regular taxed gasoline or clear diesel and then use it off-highway, you can file a refund claim with the Alabama Department of Revenue. The claim has to be filed within two years of the purchase date and must include the original or a duplicate sales receipt showing gallons purchased and taxes paid.7Alabama Legislature. Alabama Code 40-17-330 – Refund Petitions and Claims Exempt organizations can skip the refund cycle and purchase fuel tax-free up front by obtaining the proper license.8Alabama Department of Revenue. Alabama Terminal Excise Tax Act Notice
One catch: even on a successful gasoline refund, a separate two-cent-per-gallon inspection fee still applies, and the Department can deduct it directly from what you get back.
If You Drive an EV or Plug-In Hybrid
Electric and plug-in hybrid drivers do not buy gasoline, so Alabama collects from them through annual registration fees that took effect January 1, 2020.9Alabama Legislature. Alabama Code 40-12-242 – License Taxes and Registration Fees – Private Passenger Automobiles and Motorcycles; Electric Vehicles; Electric Transportation Infrastructure Grant Program A battery electric vehicle currently owes $203 per year, and a plug-in hybrid owes $103. Both figures reflect a $3 bump that took effect July 1, 2023, on baseline fees of $200 and $100.
The $3 increase repeats every four years, so the next one lands July 1, 2027. If combined BEV and PHEV registrations ever exceed four percent of total vehicle registrations in Alabama, the BEV fee drops to $150 per year. If the federal government imposes its own annual EV highway fee, Alabama’s fee is reduced by that amount, with a floor of $75 for plug-in hybrids.
Penalties for Misusing Untaxed Fuel
Putting dyed diesel into a highway vehicle is a misdemeanor in Alabama. A conviction carries a fine between $5,000 and $25,000, up to one year in jail, or both. The penalty applies both to the person dispensing the fuel and to the vehicle owner who allows it.10Alabama Legislature. Code of Alabama Title 40 Chapter 17 Section 40-17-352 – Criminal Penalties
Altering or diluting the dye to pass off untaxed fuel as taxed fuel is a felony. The fine runs from $25,000 to $50,000, with a prison sentence of one to five years, or both.10Alabama Legislature. Code of Alabama Title 40 Chapter 17 Section 40-17-352 – Criminal Penalties