New Jersey Gas Tax Rises 4.2 Cents Per Gallon on Jan. 1

Drivers in New Jersey will shell out 4.2 cents more per gallon when they fill up after Jan. 1. The total state tax hits 49.1 cents per gallon on gasoline. Diesel jumps to 56.1 cents. An automatic calculation built into a 2016 law triggers the hike, funneling money into the Transportation Trust Fund.

Why the jump? People bought less fuel this year. More efficient cars hit the roads. Hybrids and electric vehicles gained traction. When consumption drops, the tax per gallon must climb to hit the $2 billion yearly target that pays for roads, bridges, and transit work across the state.

Gasoline sells for about $2.75 per gallon right now. That means residents hand over 17.85% in state taxes every time they pump. New Jersey’s rate now beats New York State, ranking among the steepest in the nation.

Each August, the Treasury Department checks fuel sales and revenue under state law. Collections short of the Transportation Trust Fund’s needs? The rate goes up. Revenue exceeds the target? The rate can fall.

This whole system traces back to 2016. Then-Gov. Chris Christie and lawmakers struck a deal to rescue the nearly broke Transportation Trust Fund, which bankrolls highway, bridge, and transit projects. That agreement jacked up the gas tax by 23 cents per gallon — one of the biggest single tax increases in state history.

Democrats controlled the Legislature. A Republican governor signed the bill. The bipartisan law forces future administrations to keep the Trust Fund solvent through the calculation. Since then, the gas tax has bounced up and down almost every year based on how much fuel people purchase.

The Treasury Department, not politicians, determines the rate using the calculation’s result. Only the governor and state Legislature could scrap or modify the 2016 law, but doing so might jeopardize funding for road and transit work statewide.

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