LINCOLN — Starting New Year’s Day, motorists in Nebraska will have to pay more taxes when they fill up their tanks.
State Tax Commissioner Tony Fulton announced Thursday that the state gas tax will be increasing to 27.3 cents per gallon, up from 25.8 cents currently. The new rate will be in effect for the first six months of 2017.
The increase — 1.5 cents — stems from legislation passed in 2015 that calls for increasing the state fuel tax by a total of 6 cents per gallon over four years.
The first 1.5-cent hike took effect in January this year.
Legislation passed this year earmarked revenue from the tax increase for expressway construction and transportation-related economic development projects, as well as county bridge improvement.
The legislation, called the Transportation Innovation Act, is expected to boost state highway coffers by $450 million. The total includes $400 million to be raised through the tax increase and $50 million from the state’s cash reserve fund.
Gov. Pete Ricketts fought the gas tax hike, which lawmakers passed over his veto, but he pushed hard for the earmark bill.
In September, he announced a plan to complete the remaining 132 miles of the state’s 600-mile expressway system by 2033, using $300 million of the funds to be collected under the act.
The new law also sets aside money for a matching-grant program to complete county bridge repair and for transportation projects that could entice a manufacturer to expand or situate in Nebraska.
The state gas tax has three components. The component affected by the recent legislation is the fixed tax. It is set by state law at 12.3 cents per gallon for 2017.
The wholesale tax is based on the wholesale price of fuel and adjusted every six months. That component will drop a penny, down to 10.5 cents per gallon on Jan. 1, because of falling fuel prices.
The third component is the variable tax, which is adjusted every six months to bring in the revenue needed to fund the previously approved state roads budget. For the next six months, the variable tax will be 3.5 cents per gallon, up from 2.5 cents currently.
Each penny of motor fuels tax brings in about $12 million worth of revenue.