Fill up anywhere in New York and you are paying at least 42.2 cents per gallon of gasoline in combined state and federal taxes before local sales tax is added. Once the variable state sales tax prepayment and county sales taxes are included, the New York state gas tax and its federal companion typically push the total well past 50 cents per gallon, and past 60 cents in higher-tax areas like New York City. The exact figure changes by county and by quarter, because two of the pieces move with fuel prices while the rest are fixed by statute.
The Fixed Taxes on Every Gallon
Three taxes on gasoline do not move with the price at the pump. Together they set the floor.
The first is the state motor fuel excise tax under Tax Law Article 12-A. Three provisions within that article (a base tax, an additional tax, and a supplemental tax) combine to an aggregate 8 cents per gallon on gasoline and diesel alike.1New York State Senate. New York Tax Law Article 12-A – Tax on Gasoline and Similar Motor Fuel The rate is fixed and does not adjust for inflation. Distributors pay it when fuel enters the state’s supply chain, so it is already built into the pump price.2New York State Senate. New York Tax Law 282 – Definitions
The second is the petroleum business tax under Article 13-A.3New York State Senate. New York Tax Law Article 13-A – Tax on Petroleum Businesses Unlike the excise tax, the PBT is recalculated annually against a producer price index for refined petroleum products. For January 1 through December 31, 2026, the rate is 15.8 cents per gallon on gasoline and 14.05 cents per gallon on highway diesel.4New York State Department of Taxation and Finance. Publication 908 – Fuel Tax Rates It is also collected at the distributor level.
The third is the federal excise tax under 26 U.S.C. ยง 4081: 18.3 cents per gallon on gasoline plus a 0.1-cent add-on for the Leaking Underground Storage Tank Trust Fund, for an effective 18.4 cents per gallon. Diesel is taxed at 24.4 cents.5Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax These federal rates have not changed since 1993 and are not indexed for inflation.
Adding the three fixed pieces for gasoline in 2026:
- Motor fuel excise tax: 8.0 cents
- Petroleum business tax: 15.8 cents
- Federal excise tax: 18.4 cents
That is 42.2 cents per gallon before any sales tax.4New York State Department of Taxation and Finance. Publication 908 – Fuel Tax Rates5Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
The Variable Piece: Sales Tax on Fuel
The rest of what you pay in tax comes from sales tax, and this is where the total shifts around. New York does not apply a straight percentage at the register. Instead, it converts the state sales tax on motor fuel into a cents-per-gallon prepayment collected from distributors.6New York State Senate. New York Tax Law 1102 – Prepayment of Sales Tax on Motor Fuel and Diesel Motor Fuel The rate is recalculated periodically against average fuel prices, so it changes from one quarter to the next.
For the state portion alone, that prepayment has recently run somewhere between roughly 8 and 16 cents per gallon depending on the period and prevailing prices.7New York State Department of Taxation and Finance. Publication 718-F – Local Sales and Use Tax Rates on Qualified Motor Fuel and Highway Diesel Motor Fuel Inside the Metropolitan Commuter Transportation District, an additional 0.375 percent sales tax applies to fuel, worth roughly three-quarters of a cent more per gallon.8New York State Department of Taxation and Finance. Sales Tax Rates, Additional Sales Taxes, and Fees The MCTD covers New York City and the counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.
Why the Price Differs by County
Each county sets its own local sales tax rate on top of the state’s, and those local rates are also converted to a cents-per-gallon prepayment. When oil markets spike, the prepayment climbs with them.
To blunt that effect, a number of counties have capped their local sales tax on fuel at a fixed cents-per-gallon amount. Some counties cap the tax as if fuel cost $2 per gallon regardless of the actual price; others use a $3 cap. The list of participating counties and the cap levels change as local legislatures authorize or extend caps.9Governor Kathy Hochul. Governor Hochul Announces Start of Statewide Gas and Diesel Tax Holiday If you cross county lines regularly, you will notice the difference most when pump prices are high, because that is when the cap does the most work.
Diesel Is Taxed Differently
The math shifts a bit for diesel. The state excise tax stays at 8 cents, the PBT drops to 14.05 cents, and the federal rate jumps to 24.4 cents, so the fixed floor is 46.45 cents per gallon before sales tax.4New York State Department of Taxation and Finance. Publication 908 – Fuel Tax Rates
Where the Money Goes
State fuel tax revenue is directed into two dedicated accounts. The Dedicated Highway and Bridge Trust Fund receives a significant share and is legally restricted to road repair, bridge maintenance, and related capital projects.10New York State Senate. New York State Finance Law 89-B – Dedicated Highway and Bridge Trust Fund The Dedicated Mass Transportation Trust Fund supports public transit, including the MTA.11New York State Senate. New York State Finance Law 89-C – Dedicated Mass Transportation Trust Fund A 2022 report from the state comptroller found that money earmarked for highway and bridge infrastructure had been diverted to other purposes.12Office of the New York State Comptroller. DiNapoli: Money Earmarked for Highway and Bridge Infrastructure Siphoned Off
The federal 18.4 cents flows into the Highway Trust Fund, which finances interstate highway and transit projects nationwide. That fund is projected to face insolvency by 2028 absent congressional action.
Who Pays Less
Some fuel purchases do not carry the full tax load.
Volunteer fire companies and volunteer ambulance services can buy motor fuel and diesel exempt from sales tax at the point of sale, and can apply for refunds of the excise tax and PBT that were paid upfront.13New York State Department of Taxation and Finance. Sales Tax Exemption for Volunteer Fire Companies and Volunteer Ambulance Services The exemption requires a completed certificate at the time of purchase.14New York State Department of Taxation and Finance. FT-937 – Certificate of Exemption for Qualified Hospitals, Volunteer Fire Companies and Volunteer Ambulance Services
Fuel used directly and exclusively in manufacturing or production qualifies for a sales tax refund on Form FT-500. Farm production gets a more generous standard: the fuel only has to be used predominantly (more than 50 percent) in farm operations, rather than the stricter “directly and exclusively” test applied to other industries.15New York State Department of Taxation and Finance. Motor Fuel and Diesel Motor Fuel Used in Production
Diesel dyed under federal regulations is sold for off-road use only. Purchased with the correct certification, non-highway dyed diesel is exempt from the highway diesel components of both the PBT and the sales tax.15New York State Department of Taxation and Finance. Motor Fuel and Diesel Motor Fuel Used in Production Using dyed diesel in a highway vehicle is illegal under federal and state law and carries steep per-gallon penalties.
On the federal side, fuel used for qualifying non-highway purposes (farm equipment, off-road vehicles, stationary engines) can generate a federal fuel tax credit on IRS Form 4136, offsetting the 18.4 cents per gallon in federal excise tax that was paid at purchase.16Internal Revenue Service. About Form 4136 – Credit for Federal Tax Paid on Fuels You claim it on your annual income tax return, so keep detailed purchase records.