The Minnesota gas tax is 32.5 cents per gallon as of January 1, 2026. Add the federal excise tax of 18.4 cents, and the combined government tax on each gallon of gasoline comes to about 50.9 cents. The state rate now adjusts automatically each year, so it will keep moving.
Rates for Diesel and Alternative Fuels
Diesel and other special fuels are taxed at the same per-gallon rate as gasoline under Minnesota Statutes Section 296A.08, so diesel drivers pay 32.5 cents per gallon to the state as well. The federal diesel tax is a little higher than the federal gasoline tax, at 24.4 cents per gallon.1Congress.gov. Suspension of the Federal Gas Tax: In Brief
Alternative fuels carry their own rates, set to reflect their energy content relative to gasoline:2Alternative Fuels Data Center. Alternative Fuel Tax3Minnesota Office of the Revisor of Statutes. Minnesota Statutes 296A.07 – Tax Imposed
- Propane (LPG): 23.9 cents per gallon
- Compressed natural gas (CNG): 25 cents per gasoline gallon equivalent, or $1.974 per thousand cubic feet as a base rate
- Liquefied natural gas (LNG): 15 cents per gallon base rate, subject to indexing
- E85 flex fuel: 17.75 cents per gallon base rate, adjusted annually
None of these rates can fall below their statutory floors, even if the indexing formula would otherwise produce a decrease.
Why the Rate Changes Each Year
Minnesota’s gas tax used to be a fixed number that only moved when the legislature voted to raise it. That changed in 2023, when Chapter 68 tied the rate to the Minnesota Highway Construction Cost Index (MHCCI), which tracks the real cost of building and repairing roads, including asphalt, steel, and labor.4Minnesota Department of Revenue. Annual Indexing (Chapter 68 Law) As road work gets more expensive, the tax follows without a new vote.
Each August 1, the Commissioner of Revenue calculates the new rate using the MHCCI’s percentage change during a reference period ending two years earlier. The adjusted rate takes effect the following January 1. Two guardrails apply. The rate cannot drop below the base statutory amounts, so a decline in construction costs doesn’t produce a cut. And starting with the August 1, 2025 calculation, the annual increase is capped at 3 percent, so even a sharp cost spike can’t produce a dramatic jump at the pump from one year to the next.3Minnesota Office of the Revisor of Statutes. Minnesota Statutes 296A.07 – Tax Imposed
The original fixed rate before indexing was 28.5 cents per gallon. Successive annual adjustments brought it to 32.5 cents for 2026, roughly four cents of movement over three years.
Where the Money Goes
Every dollar of state gas tax revenue flows into the Highway User Tax Distribution Fund, a dedicated account created by Article XIV of the Minnesota Constitution. The constitutional language is specific: fuel tax money can only be spent on highway purposes. The legislature cannot divert it to the general fund or to unrelated programs.5Justia Law. Minnesota Constitution Article XIV
The constitution also sets the split:
- 62 percent to the Trunk Highway Fund, which covers major state highways and interstates
- 29 percent to the County State-Aid Highway Fund for regional roads managed by counties
- 9 percent to the Municipal State-Aid Street Fund for city streets
Counties and cities get a guaranteed, predictable share of road funding without having to depend on annual appropriations.
Electric and Plug-In Hybrid Surcharges
Electric vehicles don’t buy gasoline, so they pay nothing at the pump. Minnesota collects from them through a registration surcharge, restructured as of January 1, 2026. The surcharge is calculated as a percentage of the vehicle’s original manufacturer’s suggested retail price (MSRP), reduced each year as the vehicle ages.6Minnesota Office of the Revisor of Statutes. Minnesota Statutes 168.013 – Vehicle Registration Taxes
- All-electric vehicles: 0.5 percent of MSRP, adjusted by an age-based depreciation factor. Minimum fee is $150 for registrations from January 1, 2026 through June 30, 2027, then $100 starting July 1, 2027.
- Plug-in hybrid vehicles: 0.25 percent of MSRP with the same depreciation schedule. Minimum is $75 through June 30, 2027, then $50 afterward.
A new all-electric vehicle with a $50,000 MSRP would owe $250 in its first registration year. The MSRP percentage used in the calculation drops five percentage points each year and bottoms out at 10 percent for vehicles eleven years old or older. The surcharge is added on top of the standard registration tax, not substituted for it.
Refunds and Exemptions
Not every gallon is subject to the tax. The biggest exemption covers fuel used in agricultural production: operating farm equipment for growing crops, maintaining drainage systems, or running equipment like fertilizer spreaders. That fuel is exempt from both the petroleum tax and sales tax. To claim the exemption at purchase, give your supplier a completed Form ST3, Certificate of Exemption.7Minnesota Department of Revenue. Petroleum Products Fact Sheet
The agricultural exemption has limits. Fuel used for general heating, lighting, or preserving raw materials doesn’t qualify. And any fuel used for highway travel in a licensed vehicle is taxable even if the vehicle is otherwise used for farming. If you already paid the tax on fuel that would have qualified, file Form PDR-1 to claim a refund.
Minnesota also allows refunds for off-highway business use more broadly. If you use gasoline or diesel off public roads as part of a trade or business, such as running construction equipment, powering generators at a job site, or operating a power takeoff unit on a vehicle, you can file a refund claim with the Commissioner of Revenue. The fuel must be purchased and used within Minnesota, and your claim must document how much fuel was used and for what purpose.8Minnesota Office of the Revisor of Statutes. Minnesota Statutes 296A.16 – Refunds Filing a false refund claim carries penalties under the same chapter, so keep accurate records.