Drivers in Alabama will pay more when filling up at the pump starting next month.
The gasoline and undyed diesel excise taxes will increase by one cent per gallon to 29 cents per gallon for gasoline and to 30 cents per gallon for undyed diesel on Oct. 1.
Effective Oct. 1 and on July 1 of every other year after, the gasoline and undyed diesel excise tax rate will be adjusted by the percentage change in the yearly average of the National Highway Construction Cost Index and rounded to the nearest whole cent with the increase or decrease or decrease of the excise tax rate not exceeding one cent per gallon pursuant to the Rebuild Alabama Act.
According to the Department of Revenue, the 10-cent gas tax increase from the Rebuild Alabama Act was phased in over roughly two years. Gasoline and diesel taxes increased by six cents on Sept. 1, 2019, by two cents on Oct. 1, 2020, and another two cents on Oct. 1, 2021.
Under the Rebuild Alabama Act, the gas and diesel tax rate will be indexed to the percentage change in the yearly average of the National Highway Construction Cost Index beginning on Oct. 1, 2023, and every other year after July 1.
Under the law, an increase or decrease in the tax rate would be rounded to the nearest whole cent and capped at a one-cent change either way, depending on whether the previous calendar year's index average was higher or lower than the 2020 base year's average.
Sixty-seven percent of net revenue from the tax goes toward the state's Department of Transportation for infrastructure projects, preservation, and maintenance. Twenty-five percent of the proceeds go to counties, and 8% goes to municipalities for infrastructure projects, preservation and maintenance.
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