Oregon Gas Tax History: From 1919 to 40 Cents and OReGO

The Oregon gas tax is 40 cents per gallon as of January 1, 2024, the final step in a schedule set by House Bill 2017. Oregon was the first state in the country to tax gasoline, signing a one-cent-per-gallon levy into law on February 25, 1919, and the rate has climbed in steps ever since.¹ Every cent of that revenue is constitutionally restricted to roads.

What You Pay at the Pump

Oregon’s state tax of 40 cents per gallon sits on top of a federal fuel tax of 18.4 cents per gallon on gasoline, which includes an 18.3-cent excise tax and a 0.1-cent surcharge for the Leaking Underground Storage Tank Trust Fund.² Diesel carries a higher federal rate of 24.4 cents per gallon. Congress last raised the federal rate in 1993.

Combined, an Oregon driver buying regular gasoline pays at least 58.4 cents per gallon in state and federal fuel taxes before the price of the fuel itself. Oregon has no general sales tax, so there is no additional sales tax layered on top the way there is in most states. Some Oregon cities also levy their own local gas taxes, which push the total higher in those jurisdictions.

How the Tax Started in 1919

By the late 1910s, Oregon’s roads were largely unpaved and turned to impassable mud during the rainy season. Supporters campaigned on getting the state “out of the mud” by tying road funding directly to gasoline consumption. On February 25, 1919, Chapter 159 of the General Laws of Oregon took effect, imposing a tax of one cent on every gallon of gasoline sold in the state.¹ No other state had tried it.

The revenue went straight to paving. Within a decade, every state in the country had adopted some version of a per-gallon fuel tax.

Why the Money Can Only Be Spent on Roads

In 1952, Oregon voters approved a constitutional amendment creating the State Highway Fund. Article IX, Section 3a of the Oregon Constitution requires that revenue from motor vehicle fuel taxes be spent exclusively on building, maintaining, and operating public roads, streets, and roadside rest areas.³

The amendment also covers fees and taxes on vehicle ownership and operation, not just fuel. A narrow exception allows some vehicle-related fees from campers, snowmobiles, and similar recreational vehicles to go toward parks, and commercial vehicle fees can fund weight and size enforcement.⁴ Outside those carve-outs, gas tax dollars cannot be redirected to education, social services, or general administration. That rigidity is deliberate, and it is why multi-year road projects in Oregon have funding certainty most other revenue sources cannot match.

How the Rate Climbed From One Cent to Forty

The one-cent rate stayed remarkably low for decades. It took 66 years to reach 10 cents per gallon in 1985. Legislative increases through the late 1980s and 1990s pushed the rate to 24 cents, where it stayed through the 2000s.⁵ The rate jumped to 30 cents around 2011, then held until House Bill 2017 triggered the most aggressive series of increases in the tax’s history.

1919: 1 cent per gallon (first in the nation)
1985: 10 cents per gallon
By 2000: 24 cents per gallon
2011: 30 cents per gallon
2018: 34 cents per gallon (HB 2017 takes effect)
2020: 36 cents per gallon
2022: 38 cents per gallon
2024: 40 cents per gallon (final scheduled HB 2017 increase)

Each later jump reflects the same underlying problem. Road construction costs kept climbing while fuel efficiency improvements meant drivers bought less gas per mile driven. The gallon-based tax that worked in 1919 required periodic legislative intervention just to keep pace.

House Bill 2017 and Keep Oregon Moving

House Bill 2017, branded as the “Keep Oregon Moving” package, raised the gas tax by four cents to 34 cents per gallon on January 1, 2018, then scheduled additional two-cent increases every two years through 2024.⁶ Those biennial bumps were conditional and only took effect if the Oregon Department of Transportation and local governments met accountability and reporting benchmarks laid out in the law.

The final scheduled increase on January 1, 2024, brought the rate to its current 40 cents per gallon. There are no further automatic increases on the books.⁶

Electric Vehicles and the OReGO Per-Mile Option

A per-gallon tax collects less as vehicles get more efficient and nothing at all from electric cars. Oregon recognized this earlier than most states. In 2001, the legislature created the Road User Fee Task Force to study alternatives.⁷ Senate Bill 810, passed in 2013, created a voluntary program letting drivers pay a per-mile charge instead of the per-gallon fuel tax.⁸

That program, called OReGO, launched on July 1, 2015, with an initial cap of 5,000 vehicles. It was the first road usage charge program of its kind in the country. Participants currently pay 2 cents per mile driven, and drivers of gas-powered vehicles receive a credit for the fuel tax they already paid at the pump.⁹ Reporting methods include smartphone apps and plug-in devices offered by approved account managers. Some track location; others record total distance only.

Electric vehicle owners who do not enroll in OReGO pay a $30 annual surcharge on top of the standard registration fee, bringing the two-year registration to $376. Enrolling in OReGO drops the registration fee to $86 for two years ($43 per year) plus the per-mile charge.¹⁰ For an EV owner who drives 10,000 miles a year, the OReGO charge works out to $200 annually. A driver of a 25-mpg car covering the same distance pays $160 in state fuel tax. The gap narrows or flips depending on driving habits.

Penalties for Nonpayment

Fuel tax penalties under ORS Chapter 319 scale with the violation:

Late payment triggers a 1 percent penalty immediately. If the tax remains unpaid through the end of the month, an additional 10 percent penalty applies.¹¹
Failure to file a required report lets the Department of Transportation estimate the tax owed from the best available data and add a 10 percent penalty.
Using taxable fuel in a motor vehicle without the required license triggers a 25 percent penalty on the tax due.
Operating without a required license or bond carries the most severe administrative penalty: 100 percent of the tax owed.¹¹

ORS 319.990 establishes criminal consequences for false statements made in connection with fuel tax reports or refund claims. OReGO carries its own enforcement provisions. Tampering with a mileage reporting device or filing a fraudulent refund claim can result in fines up to $2,000.⁸

1
Oregon Department of Transportation. About Us: Fuels Tax
2
Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
3
Oregon Department of Transportation. Oregon’s Constitutional Dedication of Highway Funds
4
FindLaw. Oregon Constitution Art. IX 3a
5
Federal Highway Administration. State Motor-Fuel Tax Rates, 2000-2020
6
Oregon Department of Transportation. HB 2017: Overview
7
National Conference of State Legislatures. Road Usage Charge Fact Sheet: Oregon
8
Oregon State Legislature. Oregon Legislative Information System – SB 810
9
Oregon Department of Transportation. OReGO: Oregon’s Road Usage Charge Program
10
Oregon Department of Transportation. Vehicle Title, Registration and Permit Fees
11
Oregon State Legislature. Oregon Revised Statutes Chapter 319